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Participatory Research for Poverty and Conflict ResolutionThe 6th International Seminar of Afrasian Centre for Peace and Development Studies December 6, 2009

Yoshio Kawamura, Saleh Ali, Hisashi Nakamura & Misa Shojiya

龍谷大学アフラシア平和開発研究センターAfrasian Centre for Peace and Development Studies, Ryukoku University

研究シリーズ 9Research Series 9

研究シリーズ　

９　　　　　　

Is There A Japanese IR?　

Seeking an Academic Bridge through Japan's H

istory of International Relations

龍谷大学アフラシア平和開発研究センター

　ロゴは、ガーナ・アディンクラ模様の「双頭のワニ」。双頭のワニは、２つの口がたとえ争っても胃袋はひ

とつであり、つまり目的は同じなのだから、争わずに協力していこうという意味合いの平和のシンボルであ

り、アジアとアフリカという２つの地域を合わせて「アフラシア」という圏域（スフィア）を象徴的に示す

とともに、他方で同地域における非暴力による紛争解決と平和の実現を目指す本センターの強い願いを示し

ています。

The logo mark of Afrasian Centre is adopted from an Adinkra symbol of “Siamese crocodiles” in the

ancient kingdom of Asante that existed in what is now the Republic of Ghana, West Africa. It is a

popular symbol of peace and unity, as Siamese crocodiles share a stomach, or the same ultimate goal,

even if they tend to fight with each other.

龍谷大学アフラシア平和開発研究センター　研究シリーズ 9

Participatory Research for Poverty and Conflict Resolution

Afrasian Centre for Peace and Development Studies, Ryukoku University

Research Series 9


発行日／ 2010 年３月 19 日発　行／龍谷大学アフラシア平和開発研究センター　　　　 http://www.afrasia.ryukoku.ac.jp/

　　　　〒 520-2194 滋賀県大津市瀬田大江町横谷１－５　　TEL/FAX 077-544-7173印　刷／株式会社　田中プリント

PUBLISHED BY AFRASIAN CENTRE FOR PEACE AND DEVELOPMENT STUDIES,

RYUKOKU UNIVERSITY

　1-5 Yokotani, Oe-cho, Seta, Otsu City, Shiga 520-2194　TEL / FAX + (81) 77-544-7173　http://www.afrasia.ryukoku.ac.jp/

PRINTED BY TANAKA PRINT CO., LTD.

ISBN 978 - 4 - 903625 - 96 - 6表紙デザイン：　山中大輔・内田晴子





The 6th International Seminar of Afrasian Centre for Peace and Development Studies December 6, 2009

謝辞

本報告書は、文部科学省私学助成学術フロンティア事業「紛争解決と秩序・制度の構築に関する総合研究―

アジア・アフリカ研究の地平から」（平成 17 ～ 21 年度龍谷大学）による研究助成を受けた。

This publication has been supported financially by the Academic Frontier Centre (AFC) research project

at Ryukoku University “In Search of Societal Mechanisms and Institutions for Conflict Resolution”

initiated and funded by the Ministry of Education, Culture, Sports, Science and Technology (2005-2009).

　この会議および報告書において表明された見解は、それぞれの発言者または執筆者によるものであり、

龍谷大学アフラシア平和開発研究センターの立場を反映するものではありません。

The opinions expressed in this publication are those of the author and do not necessarily reflect the

views of the Afrasian Centre for Peace and Development Studies. No part of this publication shall be

reproduced in any form without the permission of the author/s and the Afrasian Centre for Peace

and Development Studies.

PREFACE

The Afrasian Centre for Peace and Development Studies at Ryukoku University is

delighted to hold the 6th international seminar on 6th December 2009 at the Omiya

campus of Ryukoku University in Kyoto. The Afrasian Centre was established at

Ryukoku University in April 2005 as an Academic Frontier Centre project funded by

the Ministry of Education, Culture, Sports, Science and Technology of Japan.

The theme of our 6th international seminar is “Participatory Research for Poverty

and Conflict Resolution”. We focused on the linkages between local community and

academic research for poverty and conflict resolution. The current globalizing

economy requires more direct and strong linkage of research for local community

development based on its characteristics or peculiarity. This linkage is also very

necessary for research and education of universities. Here we would like to call this

research as a participatory research since the research would directly involve in the

reality of community development and thus researchers would also carry out their

responsibility to commit the community. We recognize that this is also a part of

university social responsibility. We believe that this seminar could identify some

necessary and important factors to form this kind of sustainable participatory

research.

Yoshio Kawamura

－ 1－

CONTENTS

PREFACE …………………………………………………………………………………………………… 　1

Yoshio Kawamura, Ryukoku University

KEYNOTE SPEECH

Relations of Government, Company and Community in Land Confl ict

A case of Confl ict between Lonsum Plantation Company and Local Community at

Bulukumba Regency, Indonesia ……………………………………………………………………… 　5

M. Saleh S.Ali, Hasanuddin University

Darmawan Salman, Hasanuddin University

Musdalifah, Makassar Islamic University

Quest of People Based Development in Asia as Seen by an Unorthodox Economist 　23

Hisashi Nakamura, Ryukoku University

STUDENT PRESENTATION

Can Agricultural Economic Activity Strongly Reduce Rural Poverty in Indonesia?

Evidence from the Cocoa Smallholders ………………………………………………………… 　43

Muhammad Arsyad, Ryukoku University

Rahim Darma, Alabama University

Food Security Assessment in Ethiopia, Amhara Region ………………………………… 　63

Teshome Temesgen Tilahun, Ryukoku University

A Study of Small and Medium Enterprises in Sri Lanka ………………………………… 　77

Busige Nishantha, Ryukoku University

DISCUSSION …………………………………………………………………………………………… 　93

KEYNOTE SPEECH


KEYNOTE SPEECH

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M. Saleh S.Ali1, Darmawan Salman2, Musdalifah3

－ 5－

Abstract

This paper is focusing on the land conflict or agrarian conflict between local

community and Plantation Company that construct a number of relations between

government, company and local community. The relation between government and

plantation companies is much more of interest-oriented, government and local

community tended to be exploitation oriented, while the relation between company

and local people is much more on protect their own right of the land.

The paper is arguing that this confl ict can be solved by eliminating the negative

side of the relations between actors involved in the confl ict. Therefore, participatory

research approach can be used as a method to solve land conflict that occurs in

community.

Keywords: Land confl ict, Social relations, Participatory research

Relations of Government, Company and Community in Land Confl ictA case of Confl ict between Lonsum Plantation Company and Local Community at Bulukumba Regency, Indonesia

1 Professor, Faculty of Agriculture of Hasanuddin University, Indonesia, and Head of Agricultural Doctoral Program, Graduate School, Hasanuddin University, Indonesia2 Professor, Faculty of Agriculture of Hasanuddin University Indonesia; Senior Researcher on Center For Publik Policy and Development Management Studies, Hasanuddin University3 Senior Lecture of Faculty of Agriculture, Makassar Islamic University, Indonesia

－ 6－

M. Saleh S.Ali, Darmawan Salman, Musdalifah

Introduction

Land conflict is a common phenomenon in agricultural countries. It is

closely related to the essential use of the land in daily life of the local community.

Interrelationship and interaction between land and human life bring about

meaningful construction building up social behavior toward the existence of the land.

Local society who is majority as peasant, generally earning living through cultivation

of land, perceives land is not only on the basis of its productive function but also as

social status and self actualization. Therefore, it is understandable, if local community

will fi ght or make any possible effort to protect their right on the land.

Farmers will fight to protect their right toward the land if their level of

subsistence is hampered. This is in line with James Scott’s notion that farmers will

extremely fight when there is interference on their subsistence level (Scott, 1976)

Another perspective is that put forward by Popkin (1979) that every action or reaction

related to any threat of daily life performed by farmers can be categorized logic and

rational actions.

In general, many land conflict takes place between big farming companies in

one side and local community in another side. It is usually initiated by the policy of

nationalizing local community lands by government and then the cultivation right

is offered to big farming companies without prior consultation or given adequate

compensation. Through this policy, the local community will automatically be put

aside and away from their land right as well as from their life resource. It is quite

often that local community is marginalized, defeated, and finally serves not more

than as spectator of development show.

Such reality is not permanent. Local community does calm down without any

open action. Most of them perform light actions or close action like secret stealing or

robbery of company’s possessions. Sometimes they perform brutal action aimed at

getting back their robbed land. Such a case becomes eventually result in dangerous

matter because nationalization policy is confronted with inherited local community

land.

The focus of land conflict presented in this paper is that taking place between

PT Lonsum, a plantation company, and local community in Bulukumba regency

under the authority on Sulawesi Selatan province. The confl ict was initiated by the

claim between both Lonsum Plantation Company (LPC) and local community on the

rubber plantation in Bulukumba. The rubber plantation itself has very long history,

starting from the colonialism up to present era even after the reformation period. The

confl ict was fi rstly caused by the renewal of regulation of offering of cultivation right

－ 7－


to LPC on the land areas cultivated inherently from generation to generation by local

community in that area.

The issue presented in this paper is identical with other land conflicts, taking

place between companies and local community. The difference will be in the

uniqueness of phenomena because it has a very long history without permanent

solution and is one of the biggest confl icts in South Sulawesi ever happened. Another

unique characteristics of the above conflict was the patronage-client relationship

among Makassarese-Buginese communities (Pelras, 2005; Putra, 1988) showing that

fi ght of peasants to landlord is of very rare event. Solidarity sense constructed tends

to be more client – patronage relationships than inter client or inter patronage relation.

This phenomenon seems to be identical with the land conflict taking place during

the Marxian era. That is why, the land confl ict between LPC and local community in

Bulukumba became so unique and interested at least viewed from the perception of

Sulawesi Selatan society.

Agrarian Confl ict in Indonesia

The intensity of agrarian conflict in Indonesia can be seriously categorized in

large scale. Data found during the era of 1970-s up to 2001-s by Komite Pembaruan

Agraria (KPA) or Agrarian Reform Committee showed that during that era, there

were 1753 of land confl icts ever happened. Among them, 334 cases were big plantation

companies as shown in (Table 1). It was convinced that the recorded land conflicts

were merely the very small parts of the very huge unrecorded ones.

－ 8－


Table 1: Distribution of Agrarian Confl icts in Indonesia

from 1970-s to 2001-sProvince Number of cases

N Aceh DNorth SumatraWest SumatraRiauJambiBengkuluSouth SumatraLampungWest JavaJakartaCentral JavaYogyakartaEast JavaEast KalimantanCentral KalimantanSouth KalimantanWest KalimantanSouth CelebesNorth CelebesCentral CelebesSoutheast CelebesBaliEast Nusa TenggaraWest Nusa TenggaraMalukuPapua

47121323371315754484175991916933627264815589134427628

Total amount 1753

Source: Agrarian Confl ict Data Base – KPA, December 31, 2001

The above data indicated that the cases of agrarian conflicts were found more

frequently in more populated province like in West Java, East Java, Central Java,

The Capital City of Jakarta, South Sumatra, North Sumatra, and some provinces in

Celebes.

Some of the agrarian confl icts mentioned earlier are of latent or hidden ones, but

the others became open issues resulting in extreme actions and bring about the fall of

victims mainly from those claiming that those lands were their possessions.

Indonesia Agrarian Reform Committee has classifi ed the agrarian confl icts into

15 categories; 1. confl icts because of dam building; 2. factory building and industrial

areas; 3. developing of product forest areas; 4. developing of conservation and

protected forest areas; 5. the use of water areas; 6. developing of large plantation;

7. developing of large fresh water fishery; 8. activities and the developing of large

mining areas; 9. developing of housing and new city areas; 10. developing of military

facilities; 11. developing of governmental facilities; 12. developing of public as well as

－ 9－


city facilities; 13. developing of transmigration areas; 14. developing of tourism areas

including golf course; 15. other categories beyond the 14 items above (Lounella and

Zakaria, 2002).

Confl ict Phenomenon in Makassar –Buginese Culture

Makassar-Buginese has a unique construction from its social culture if it

is related to the phenomenon of class conflict. If we perceive the class as the

contradiction between the high-class as the landlord and the proletarian-class which

is known as the peasant, thus the history of relationship between them in South

Sulawesi does not related to the class but the patron and client relationships. In

Makassar-Buginese socio-culture, the landlord is the King while the peasants are the

slave who is working for the landlord, and half of them live as the common society.

The patron-client relationships in South Sulawesi had constructed from

exploitation by structure process while hegemony by its culture process. Hence, if the

weak class is on the top of exploitation, there will be no path for them to deny from

the exploiter except to get protection from them. The protection from exploiter will

create a relationship of dependency (Minawang relationship). The strong class called

as the patron or to-nipinawang and the weak class get the position as the followers

(to-minawang) or client.

According to the history of Makassar-Buginess social culture, the relationship between

the patron and the client never get involved into a class-conflict. The social solidarity

that formed is a vertical solidarity (patron’s protection to the weak class). Therefore, the

peasant’s struggle versus the landlord almost never had represented indeed. But in the

other hand, the confl ict is only happened between the patrons and the peasants.

The value of Siri as a prime value for Makassar-Bugenese, it does not construct

the confl ict of peasant and the landlord signifi cantly. The value of Siri’ and Pacce are

not defi nitely manifesting on the side of horizontal path neither between the peasants

nor the landlords/ patron. In reality, Siri’ of the landlord is also felt by the peasant/

the worker itself. Pacce of the peasant is felt by the landlord as well.

Chronology of Confl icts

The land-conflict of Plantation Company (PT Lonsum, abbreviated as LPC)

between the local community at Bulukumba regency started when the company

expropriated the land with 350 hectares violently which was cultivated by the rural

－ 10－


society of Tambangan village (Known as Bontobiraeng village) at the end of 1981. The

company did that because they claimed those land were included in their Right of

Tenure. (Hak Guna Usaha). This action was rolled by the company’s offi cers and was

supported by the local government authority.

Due to the expropriation, the local community was making a struggle. They

prosecuted LPC into the Trial of Bulukumba’s Government. By that demand the trial

approved the claimer of local community for 200 hectares, and LPC was ordered to

return the amount of land onto the claimer.

Base on the decisions LPC make appeal in the High Court (Pengadilan Tinggi) at

Ujung Pandang city (now is called Makassar city) and its claimer was approved and

rejected the community’s prosecution. After that, the prosecutor demanded this case

into the Supreme Court (Mahkamah Agung), which was terminating the claim of LPC,

then encourage the verdict of Bulukumba’s Government Trial that was proclaimed in

1991. By this decision, the LPC demanded the application of re-reviewing (Peninjauan

Kembali) the case to the Supreme Court, but it was refused due to unreasonable

claim.

On the verdict of Supreme Court, the execution was applied by taking the frontiers.

Nevertheless, the part of LPC stood and claimed that the land which was executed

became 62,060 hectares. They then demanded an objection to the Trial hence the

execution was repeated. But re-execution was failed due to a struggle of the local society.

The climax of this confl ict was running on July 21st 2003 at 8 a.m. when the local

community made huge groups to dominate the area of rubber crops plantation of

LPC which is located on Bontomangiring, Bulukumba. This situation was commented

by a woman from local community, Badariah. She said: “I do not know on that day,

or how many was the people on the location of conflict. What I know is there were

many people, thousands of peasants who came from Bonto Mangiring, Bonto Biraeng,

Kajang Tibona and the other area of plantation and then they cut the rubber trees

and dominated the PT. PP Lonsum area.” (Interviewed on June 6th, 2007)

The Protester were auctioning under control until several of them cut the trees

on that area. The others followed it, thus the riot was getting under uncontrollable.

LPC and Police were hard to calm down that situation and make the police do several

shoots to calm down that disturbance as one of policeman said: “The protesters

burned the document from Kukumba, Division of PT. Lonsum, and they act anarchist

even against us until we could not handle them. What we did is we had to do several

shoots to warn them,” (Interviewed by A. Baso Muragawali on May 10th, 2007)

－ 11－


Relations between Government and Plantation Company and Local Community

In case of agrarian confl icts especially those are involving plantation companies,

there are three main factors involved, namely authority (state), plantation companies,

and local community including nongovernmental organization. The relationship

among the three main actors can be illustrated as follows:

Government

　 Intrest　　　　 Domination

Right

　　　　　　　　　　　Company　　　　　　　 Local Communtiy

　　　　　　　　　　　 NGO

Figure 1: Venn Diagram of Relation Between Government, Plantation Company, and Local Community

1. Relation Between Government and Company

The Government-Company relationship is merely based on the interest. The

government has the interest in developing the region by exploiting the natural

resources and also presenting the human resources which is functioned by the

company. The company also has the interest to exploiting the resources which has

provided in order to get any benefi ts.

This relationship starts when the government begins to put the right into the

plantation company to dominate and manage the land. In the area of Netherlands’s

colonization called as Erfacht right yet after the law about Agrarian was applied, the

company has duration about 30 year from the Right of Tenure (HGU).

The government - LPC relationship also gives the protection towards the

domination area when the company gets into conflict with society. The protection

contains the social construction from government by using the public functionary in

order to decrease the society’s struggle so that the confl ict will not appear manifestly

(Intern confl ict) as a public functionary said: “Yet because of the strength of the elite

of society and the local government the situation seemed to be hidden by external

－ 12－


parts while the path process towards the confl ict solution was still going on”. However,

as long as the time goes and the development of NGO, the hidden confl ict fi nally can

be identifi ed by the parties who has either righteous or unrighteous intention. Hence,

the confl ict which began in this high culture region became as the public consumption.

Government also gave protection to the company by positioning the troops or

policeman in order to secure the area which is claimed as the company’s own. The

company’s officers were merely intimidating the society and demonstrated their

royalty to the company as one of the citizen said: “The policemen who work for the

company to secure their right of Tenure defi nitely show that they are tend to stand

on the company of PT. Lonsum which already took the peasant’s right. Lonsum has

taken all of our land by sending the policemen and so many troops. ”

When the protection or tendency becomes no longer popular, the government

expands the relation to protect the company by playing the role as mediator to fi nd

the way to seek solutions of the confl icts. Thus everything is running well and secured

without the claim-conflict of land rights as an informant said that: “There were so

many ways that government did in order to keeping the peace between Bulukumba

society and PT.Lonsum. We had already provided the time and spaces to discuss the

solution way of this problem. Because we realized, as the government we should be as

a proper mediator to fi gure out the resolution of this confl ict. Although it has not done

yet, but we will not stop to make the morals’ approach or rational approach for the

both sides in order to create and keep the words of peace.” (Interviewed at La Kama

Wijaya on July 9th, 2007)

The company should fulfi ll its obligations which are placed by the government by

paying the taxes or the current donation that already given by government and the

local council. Besides that, the company has already built the social infrastructure

and others so that this area will be more developed. The existence of this plantation

company is tending to give a bit affect. By this case a citizen said: “When the company

plantation has not already existed, the situation in this area was very poor. There

were no electricity, waters, and schools; even the access of information was very

diffi cult due to the lack of transportation and communication facilities. But after PT.

Lonsum came here, everything has been developing around our area. Day by day we

are enjoying our development which could be seen until today.” (Interviewed on June

2nd, 2007)

The other relationship of company-government that has been changing on its

political side is the election of head village or the head regency with its direct election

by the public. The amount of employees and labors owned by PLC is quite high, and

so it could be used as a property for the company in making a bargain between those

－ 13－


candidates. The case is always easy to apply according to the tradition of its society

that people are always loyal to their lords.

2. Relation between Government and Community

The Government-Society relationship developed is to take over the land rights,

oppression, mediation for peace, and plasma development until the distrust of the

society into the government.

The Expropriation of tenure right is applied by the government recognizing that

the land which does not contain the right of formal law is the state’s land. Due to the

approach, the state has a right of exploiting the land to gain more benefi ts. Almost all

of the land cultivated by the local community does not have a legal admission such as

certifi cate. Hence, the land could be claimed easily by government as the land of state,

and then it will be taken by the company with its tenure right, which is creating

society struggles.

People in the society who are involved in the struggle believe that the existence

of this plantation company does not give any advantage to them. Besides that they

are still trying to get back their own land. It is similar with the opinion from a citizen:

“We know that Lonsum has been making a change for our live around this area,

but we also realized that what we get is more less then everything that has taken

from us due to its existence. They merely see the one side from the economic part.”

(Interviewed by Mulyadi, the Leader PPMA Bulukumba on June 28th, 2007)

The impacts of their struggle are the pressure and intimidation which make the

family living become uncomfortable as one of the citizens’ opinions: “We have been

living in this village since we were born. We worked as the peasant and we are living

in simple way but we are enjoyed it because we are gathering together in a house and

in one village. But since the existence of that non-government company then claimed

our land as their rights, we started to live in the atmosphere of oppression. We are

finally rebel the situation but the fact is we became apart. Some of our family had

gone because they cannot stand in this situation. But I am still staying here because I

believe that I can struggle to maintain my rights.” (Interviewed on April 27th, 2007)

Due to the pressure that has been through the society, the failure to gain their

rights will be the a distrust of people towards the government. As a citizen said: “We

do not trust the government as well as the police, the Bupati (head of regency) and

the local senator (DPRD); we are disappointed because we cannot fi nd any resolution

for this confl ict. We cannot understand where their sides are. At least they have not

been doing anything for our society.” (Interviewed on April 30th, 2007)

Though in, the society there have been struggles, the people can maintain their

－ 14－


rights. If they are not rebelling for their right now, it does not mean that they are

defeated. They are just silent for a while as a citizen said: “We are keeping silent

right now, but it does not defi ne that we are quit. We cannot always do any struggle or

rebellion because we have to get some food so we have to still do any job.”

Indeed, the society where there are struggles is always open to be found the fair

and honorable resolutions. They wanted to gain them though the government offi cers

are already untrustworthy because they always tend to stand on the company’s side

so that mediation will not be working properly. The society wanted the existence of

independent institution, which could give some solution for this case.

3. Relation between Company and Local Community

The relation between company and local community related to the right legalization.

The company’s rights require the legalization by the state because the society wanted to

gain the legalization rights by the company and government on the land they had. The

society understands that their land is not that of LPC.

The company can claim its rights on its own land; managing its land, planting

the rubbers’ crops by ignoring the society’s protests. The company argues that the

case is not necessary because it is already testifi ed on the right of tenure. But on the

other hand, the society rejects that the right of the company’s area has become a part

of their own land. The citizen is hesitating about that right as a following opinion: “A

legal HGU of PT. Lonsum should be proclaimed to people. Thus the current institution

should be testifi ed by citizen by the measure of the land frontiers.” (Interviewed on

April 5th, 2007)

The claim of the above citizen could be identified that there is an accusation

that LPC has occupied the land which is not based on its borders hor on that of HGU

(Right of Tenure). The press broadcasted by Solidaritas Nasional Untuk Bulukumba

(SNUB) that the 10,000 hectare land of Kajang’s community has been occupied by

LPC.

The struggle of the society to gain their rights was caused by the company

which had got the provocation by non-government organizations. One of the

company’s offi cers said: “They cut down trees ruined houses, burned, the properties

of PT. Lonsum and its employees’ due to the provocation of some non-government

organization.” (Interviewed on May 11th, 2007)

The presumption does not have any evidences because the non-government

organization always proclaimed the right of society and managed the people to

protest when the conflict started. One of the citizens was arrested due to the case

of vandalism action on July 21st, 2003. He said: “When the confl ict on July 21st, 2003

－ 15－


happened, I was invited by one of the members of a non-government organization to

maintain the society’s right. I was told to bring some lunch. I was surprised because

the thousands of people were cutting down the trees of Lonsum’s. Then I directly

followed them because I did not know that I would face the policeman. I just knew

that I followed it to keep the right of society. I was arrested on the day and they asked

my testimony. I was sent to jail because they placed me as a guilty.” (Interviewed, on

May 19th, 2007)

Nevertheless, that presumption was refused by the Chief Council of LSM-DRB

which has been actively advocating the rights of society in the case of expropriation of

their lands LPC. He said: “We are not the main cause of the confl ict between Lonsum

and Bulukumba society. We joined the society in order to fi gure out a proper, fair and

relevant conflict resolution. We proposed the company to make a peace agreement

which will not harm the one side of them. Yet they had never made any effort to give

us a chance to do that. ” (Interviewed on July 8th, 2007)

The violence did not seem a proper action to gain the rights but a legal crime.

Transferring the issue to a weapon depressed the struggle of society. The government

and company are working together in arresting and jailing the citizen who was

involved in the action of violent protest. On the blood-confl ict, the policeman arrested

hundreds of citizens.

Confl ict Resolution

Optimism about a peaceful settlement between the government and local society

exists, however, it is still open. Those parties still recognize the necessity of peace by

the reason of the duration. If they defer the confl ict, it will be inconvenient for both

sides. The government will always feel threatened while the society will get many

pressures and intimidation, aperson added: “Verily, we expect that there will be any

institution which could resolve this serious case and so we can fi nd the way for peace.

We are a small group and not clever but we knew that this problem will be resolved. We

were already fed up with this situation; we want peace and fairness.” (Interviewed at

Salassa on June 28th, 2007)

Theoretically, there is no specifi c approach which can be used to resolve the case

of land-conflict. Bennett and Neiland said that resolution for conflict is generally

specific. There are so many methods for resolution but it does not match to every

single case. In summary we have to fi nd the proper approach for the current confl ict

case.

－ 16－


Conflicts can be solved by two approaches. Firstly by the trial (litigation) and

by alternative approach which is known as alternative dispute resolution (ADR). By

the litigation process the confl ict will be brought to the formal law and the truth and

falsehood could be found. On the other hand, by the ADR approach, the case output

will be fl exible and acceptable by all the parties and it will be useful for the long term

orientation. However this approach is not recognized as the winner of the case. The

popular types of ADR are negotiation, mediation, facilitation, and arbitration.

Those approaches have already been applied on the land confl ict in Bulukumba.

By the litigation process, it reached a verdict that the society consented to win the

case for their claim and whomsoever from them already being executed as well. The

point is that the execution does not run well and carefully, and so the plantation

company does not accept the existence of additional land of society executed for them.

Moreover’ the company intended to expropriate back the executed land but it was

prevented by society.

The ADR approach process has attempted, nevertheless, it did not show any

resolution because both parties did not stand on the equal position. Plantation

Company is always taking the benefi t given by the government while the society is

placed as a guilty and a crime position. This approach would be useful if both of them

realize what their rights are and respect each other.

At any rate, there are four issues that we should handle in order to resolve the

confl ict based on the study on the confl ict area:● Firstly, making an audit of society rights in the confl ict area accurately. It can

be initiated and involved by all of stakeholders including any non-government

society. Thus, the result should be verifi ed by public-hearing. ● Secondly, re-evaluating and revising the entire Tenure Rights (HGU) of

companies. It should be revised based on auditing-result. ● Thirdly, proclaiming the dispute object as Status Quo cannot activate the

functions on land until the permanent verdict has been claimed. Hence, the

government should control this program harshly.● Fourthly, providing social infrastructure will be accepted the land’s rights of

society.

Searching a Methodology for Confl ict Resolution

As noted by Bennett and Neiland, there is no specific approach that can be

used to resolve a conflict. There are so many methods of conflict resolution but it

－ 17－


doesn’t match to every single case. One method that can be used to solve a confl ict is

Participatory Research.

Participatory research can be defi ned ”as systematic inquiry, with collaboration

of those affected by the issue being studied, for purpose of education and taking

action or affecting change.” (Green et al., 2003) While Maguire defi nes participatory

research as”a process of collective, community-based investigation, education and

action.” Hall perceives participatory research as integrated approach involving

the participation of community members to investigate social reality, builting local

capacity for the purpose of increasing community awareness to solve their problems.

From these defi nitions we can see the objectives and characteristics of PR as; 1. social

investigation – to develop the critical consciousness of people; 2. education process

– to build people’s capacity and awareness; and 3. action oriented – to change or

eliminate problems.

Two terms related to PR need to be distinguished, namely PR-for- Action and PR-

through-action (Huizer, 1997).

PR-for-Action mostly consists of the regular forms of survey research through

questionnaires or interviews with a view of quantifying data on the situation of

community. It is self-evident that before starting such investigation in a concreate

situation, statistical and other overall material should be collected and studied. Other

relevant data at community level such as population, land tenure, economic activities,

social activities, on going or past project activities as well as historical data should be

also collected.

Based on the data researchers provide the feedback to the communiy at group

meetings (public discussion) to verify the data. Through these public discussions it

can be found problems faced by the community and possible alternatives actions for

solution.

PR-through-Action type takes as a point of departure that most activities

in the field can be seen as experiments proving (disproving) that people can use

certain group strategies to change their situation for better and how to do this most

effectively through group formation and common action on their own behalf. In its

process needs a careful recording of the process of relevant undertaken activities.

PR–for-Action and PR-through-Action are generally complement each other as

components of PR. They can be complemented at various levels. These are mostly

undertaken at the village level or community level and have in such situations proved

to be useful approach to enhance the empowerment of disadvantaged people.

－ 18－


Process of PR

PR is a research approach, philosophy, or process. Its core is the partnership

between researchers and the community or those being researched (Maguire,

1987). It does not follow a restricted and rigid research methodology as we found in

conventional approach. The major difference between the conventional approach and

the PR approach to research lie in the questions of who defi nes the research problem,

and who generates, analyzes, represent, own and acts on the information resulting

from the research project (NAPCRG, 1998).

There is no rigid steps or procedures that one has to follow in PR. But mostly

include the following process (NAPCRG, 1998):

1. Establishing partnership. All stakeholders involved in the research should be

treated equally as partner. Their knowledge and experience are considered

complementary. No one in the process will dominate other stakeholders.

2. Education and Capacity Building. PR is an impetus for change by relating

knowledge to action through a dialogic method. Through this dialog, there will

be an educational process where people can learn from each other and think

critically about their political, economic and social surroundings.

3. Empowerment. Through educational process and exchange knowledge, people

will aware their problems and know what resources that can be used to solve

them and how to do it.

What PR Can Do to Solve a Confl ict?

PR can be used to solve a confl ict. In the case of confl ict between LPC and local

community in Bulukumba, the PR at least can do the following .

1. PR can dig out the problems and the cause of confl ict and their consequences

that will be faced if the conflict unsolved. Understanding problem is very

initial things need to be known before solving a confl ict . In Bulukumba case,

it is clear that the root of confl ict did not understand by all parties involved.

Government and Plantation Company perceive the conflict as criminal act,

while the local people perceive as struggle for right.

2. PR will make people respect and acknowledge because it is an educational

process where people are treat equally. No domination and pressure in its

process. In Bulukumba case, it is clear that local people who are under

pressure and domination from local authority and plantation company. Many

－ 19－


local people had been put in jail, moreover, this situation make local people did

not respect the local authority and the company.

3. PR can identify power structure in community and who hold the power. It is

clear that the power structure in Bulukumba society is beside local formal

authority, there is non formal leaders that usually determine the decision in

community.

4. PR can identify aspirations, motivation, and, needs of the people who involve

in confl ict. The aspirations and needs of local people in Bulukumba case are

not considered by local authority and company. The land of local people was

taken without good compensation.

5. PR can list resources for solving confl ict arising from the research process.

6. PR can test the acceptability of any decisions have been made.

Conclusion

The Land conflict between Lonsum Plantation Company and local community

constructed the relations among actors involved in the confl ict. There are three main

actors, that are government, plantation company, and local community as well as

NGO.

The relations between government and Plantation Company tended to be a

protection of relation which is based on interest where the government provided

protection to the company either by policy or by force from government apparatus

especially from police. On the other side, Plantation Company will provide economic

benefi ts to local government.

The relations between government and local community tended to be domination

and coercive in nature where the government based on their authority push the local

community to accept any policy or decision regarding the existence of the plantation

company, while the local community perceived such actions are unfair and have to be

protested.

Relation Between Company and Local Community related to right legalization

where the plantation company protected the confl icted land based on the land right

that they got from the government, while the local community based their right on

local custom. The local community understands that their land is not the part of the

Land of Plantation Company.

Until now this land conflict is not solved yet. Latent conflict is still there and

it will happen again any time if both parties do not respect each other. Therefore,

－ 20－


in order to solve the conflict, there is a need to do re-inventory the rights of

local community that have to be accommodated by any formal decision made by

government. The object of conflict has to be stated status quo until a permanent

solution is achieved.

Participatory Research as method can be used to solve conflicts such as in

Bulukumba because the method contains social investigation, educational process,

and action oriented.

Refferences:

Bachriadi, D and Lucas, A. 2001. Merampas Tanah Rakyat: Kasus Tapos dan Cimacan

(Taking People Land: Case of Tapos and Cimacan), Jakarta: Kepustakaan

Populer Gramedia (KPG).

Bawden, R. 1995. On the Systems Dimension in FSR. Journal for Farming System

Research-Extension. Vol. 5, No.2,

Bennett, E. and Neiland, A. 2000. “Review of Study Approach to Confl ict.” Centre for

the Economics and Management of Aquatic Resources (CEMARE).

Bidwell, D. 2009. Is Community-Based Participatory Research Post Normal Science?

Science, Technology & Human Values. Vol. 34, No. 6.

Coser, L. 1966. The Functions of Social Confl ict, New York: The Free Press.

Green, L.M. et al. 2003. Guidelines for Participatory Research in Health Promotion,

in MInkler, Meredith and Nina Wallerstein (eds), Community–Based

Participatory Research for Health. San Francisco, CA: Jossey-Bass Inc.

Hall, B. 1993. Introduction, in Peter Park, Mary Brydon-Miller, Budd Hall, and Ted

Jackson (eds.), Voice of Change: Participatory Research in the United States

and Canada. Westport: Bergin & Garvey.

Huizer, G. 1997. Participatory Action Research as Methodology of Rural Development.

http://www.fao.org.

Jos, H. 2001. Perlawanan Petani: Kasus Tanah Jenggawah, Peasant Fight: Case of

Jenggawah Land Bogor: Pustaka Latin.

Kartodirdjo, S. and Suryo, Dj. 1991. Sejarah Perkebunan di Indonesia: Kajian Sosial

Ekonomi (History of Plantation in Indonesia: A Study of Socio-Economics).

Yogyakarta: Penerbit Aditya Media

Lounela, A. and Zakaria, R. (eds). 2002. Berebut Tanah; Beberapa Kajian

Berperspektif Kampus dan Kampung (Scrambling Land: Some Studies From

Campus and Village Perspectives). Yogyakarta: Insist.

－ 21－


Maguire P. 1987. Doing Participatory Research: A Feminist Approach. Amherst: The

Center for International Education, School of Education.

NAPCRG (1998). ”Responsible Research with Communities: Particpatory Research in

Primary Care.” Executive Summary. NAPCRG Annual Membership Meeting.

Montreal.

Ngadisah. 2003. Konflik pembangunan dan Gerakan Sosial Politik (Development

Confl ict and Social Movement). Yogyakarta: Penerbit Pustaka Raja.

Pelras, C. 2007. Manusia Bugis (Buginese People). Jakarta: Gramedia.

Popkin, S. 1979. The Rational Peasant: The Political Economy of Rural Society in

Vietnam. California: California University Press.

Putra, A and Shri, H. 1988. Minawang: Ikatan Patron Clientt di Sulawesi Selatan

Akhir Abad 19 (Minawang: Patron Client Tied Up in South Sulawesi at End

of 19 Century). Yogyakarta: UGM Press.

Scott, J. C. 1976. The Moral Economy of the Peasant: Rebelion and Subsistence in

Southeast Asia. New Heaven: Yale University Press.

Wiradi, G. 2000. Reforma Agraria: Perjalanan yang Belum Berakhir (Agrarian

Reform: A Journey Not Finish) Yogyakarta: Insist Press.

―――――. 2004. Masalah Agraria: Masalah Penghidupan dan Kedaulatan Bangsa

(Agrarian Problems: Problem of Livelihood and Unity of Nation). Makalah

Stadium General Jurusan Sosek Tanggal 17 Mei 2004. Fakultas Pertanian

IPB, Bogor.

Hisashi Nakamura*

－ 23－

1. Search of Participatory Social Sciences

Social science in general and economic science in particular are fractured in

contemporary Japan and to some extent in the modern world, too. They are divided

between the demands of science and of pragmatism although it is often emphasized

that economics is much more scientific than other branches of learning concerned

with man and society.

The more one specializes the more one loses common sense. In the case of

economics this is particularly noticeable. It also resembles the position of physics

in modern natural sciences. The mechanical model of economic theory occupies an

excessively important place. The space for non-specialists to talk about economics

is becoming increasingly restricted. The rigorous consolidation of theory makes it

diffi cult for a non-specialist to understand or for the people whose lives it affects to

intervene.

However, even if one acquires the understanding of economic theory, it is not

proof that one correctly understands and analyses actual economic activities. In

reality even with the fi ne tools to analyze the contemporary economy it is necessary

to lay down very strict conditions so that in effect one is further separated from actual

economic processes. Everybody knows no single economist can demonstrate the way

to explain and settle the global financial crisis in 2009. What was actually done is

the very simple exercise to put tax payer’s money into the banking sector for writing

off some of bad loans. If that is so, is there not a methodology that can reflect the

reality of the people who are the subject of economics? Such a method should allow

Quest of People Based Development in Asia as Seen by an Unorthodox Economist

* Research Fellow, Research Centre for Interdisciplinary Studies in Religion, Science and Humanities, Ryukoku University

－ 24－

Hisashi Nakamura

the citizens of the area to understand their situation. The dream of us is to hand over

economics from specialists to the layman so that even without specialized academic

knowledge they need not feel indebted to scholars and can work to make their own

world.

Pragmatism at the other end of the spectrum offers an endless range of issues

to deal with the accumulated deficit of public finance, increasing unemployment,

economic disparities between the rich and the poor, industrial restructuring,

investments in energy resources, industrial relocation, environmental problems,

financial support for social welfare, proper tax system, privatization of public

enterprises, etc. There are no economists who would argue that these issues are not

linked to economics as a science. Economists actually feel honored to be included by

the government on economic councils and are happy to participate in formulating

policy proposals for political parties. However, it is important to remember that there

is a difference between the enthusiasm of the economists in suggesting proposals

to solve actual economic problems and the effectiveness of economics as a science

in resolving these problems. It is not just that economics is divided but that the

two poles of science and pragmatism are in a state of flux. The two extremes exist

simultaneously in the same person and in the same economic departments and

research institutes.

Fresh students of economics always find it difficult to understand that there

are no boundaries between the two poles of science and pragmatism in economics.

In most universities both the economic theories even though they reject mutual

understanding exist together (modern economics of market mechanism and planned

economic system) and work to get the students to choose between them. There are,

however, a third group of economic theories: the institutional school, the economics

of ecology, economic anthropology and social economics, non-market economists, the

self-management group which lie in the middle ground much as the Third World lies

between the East-West confrontation and peaceful co-existence.

Japanese perception of economic science had the remarkably peculiar feature

in the process of modernization of her society due to the historical background. In

the pre-modern Edo period, Japanese society was stratified into the hierarchical

order of four major classes, namely samurai at the top, followed by land-holding

agriculturists, then craftsmen and artisans and lastly merchants at the bottom. This

value system was the refl ection of the closed-door policy strictly implemented by the

Edo Government for more than 250 years before the modernization stage. The ruling

class of Meiji Period, chiefly consisted of ex-samurais and landlords, inherited the

sentiment against commercial interest before the closed policy in 16th century. They

－ 25－


found that the economic theory of Marx had strong resentment against commercial

interest and happy to accept it as main stream of economic thought taught in

the major imperial universities for the education of elitist leaders in the next

generations1.

After market and plan, the third system is an economic system where

resources are distributed through cooperation. In such an economic system the

fundamental axis is cooperative mutual inter-dependence through the development

of communication systems. This is linked to the idea of fraternity or friendship.

The core of the argument should rest in economics related to life system or ecology.

After observing in minute details the effect of neo-classical synthesis which was

formed along with the success of the Keynsian spending policies and the centralized

planning experiment after the Russian revolution, Prof. Tamanoi Yoshiro and his

group of economists started to argue in Japan that it would not be possible any longer

to rely on either the market or the planned economy2. It was this way of thinking

that led to a third system of economic principles. The Society for Entropy Studies

in Japan formed by Tamanoi and others in 1983 have been active in this direction.

Unlike either the economics of the market or the plan, the theory of an economics

of consultation, cooperation and communication has just begun. There are so many

arguments that have been advanced that it is as yet impossible to build a systematic

theory. Also even when systematized it may take a very different form from price

theory and plan theory.

The present exercise is a part of attempt within this third group to present a

people based economic theory. To build a people based economic theory it is probably

easier to do this in Japanese universities that have a stronger composite culture

than in Western universities. However, it must also be said that teachers as well as

students must go together outside the campus and learn from economic activities of

common people. People who want to find a new way through their fieldwork would

like to participate in the activities of the real world.

An important aspect of economics based on people is, therefore, the fieldwork

which is an area where it is possible to realize a two way process of exchange between

the teacher and the taught. To get to the heart of the problem more than learning

from books the method we must use is to go out and make our own investigations

and make our own observations and learn from people who are engaged in economic

activities. Perhaps there may be times when we have to question our own life style.

1 This is how the complete works of Marx and Lenin have been translated into many Japanese editions and widely read even after the collapse of socialist planed economic system.2 Yoshihiro Tamanori, The Selected Works of Tmanoi Yoshiro, Tokyo: Gakuyoshobo, 1990.

－ 26－

Hisashi Nakamura

The social sciences that I learned through the fieldwork was more from the living

words inscribed in the social relations in Asian society rather than from the words in

published books. That I learnt to understand something of the meaning of economic

activity I owe to the workers and the peasants in South Asia as well as in Japan3.

The necessity of objective studies is rooted in separation of subjects and objects,

which is proper in modern science. I did not have my subjectivity when I was born.

What I regard as my subjectivity all come from other places besides myself. Subject

consists of what you heard from other people and knowledge you learned in various

forms from people surrounding you. Then what is the object? Is there any objectivity

excluding you and me? The objectivity is summation of subjects of each of us and the

way of summation affects the nature of the object.

That is, so called objectivity is a set of subjects added in certain way. So called

subject was not born in him/herself, but it was brought from outside. Putting it in

another way, the subject is an outcome of treating objective knowledge properly. We

can say that the treated object is the subject and that the summation of the subjects

is the object. Thinking in this way, we need methodological participation combining

method of object and method of subject, or so called science of those who are engaged.

Mahavira, who was the founder of Janism, had sufferings about it, then finally

reached “anekantavada”. In Sanskrit, “anekantavada” means the position that the

truth is not only one. He reached the conclusion that for human beings, the truth is

not a single just as Whitehead came to finally conclude his philosophical research

while emphasizing that exactness is a fake.

2. Studies on Cross-Civic Relations

Modern social sciences have been implicitly founded upon a pair of postulates.

One is the framework of the modern nation state. Social sciences as established

against the background of modern Western history are inseparable from the

formation of the nation state. Specifi c fi elds in social sciences have accordingly been

devoted to the analysis of social problems arising within modern nation states, and

to the elucidation of international relations between modern states. Human society

in the 21st century, however, attempts to overcome the modern nation state and

the limits of her institutions. While regionalism in its broad sense as in the case of

the European Union is integrating nation states into a multi-national federation

3 Hisashi Nakamura and Hiroyuki Hirooka (eds.), Huirudo Waaku no Shingihou (New Method of Field Works ), Tokyo: Nihonhyouron, 2000.

－ 27－


and pointing towards a new kind of unity, the narrow sense of regionalism as in the

case of Yugoslavia is heading towards ethnic independence, local autonomy and the

dissolution of the modern state. The existing academic disciplines like economics,

sociology, jurisprudence, political science and so forth were formed on the basis of the

implicit ideology of the nation state and thus cannot adequately take as their object of

study the direct interchange of people belonging to different cultures.

The second postulate is the methodology established on the model of classical

Newtonian physics. This research method excludes interaction between the observer

and the observed, through which modern social science boasted that it acquired

the means to objective research which would be free from the subjective view of

social value. In order to overcome the shortcomings of objective research without

participation, an endless process of specialization proceeded to create minute branches

of an academic discipline. But, in fact, people need to participate in the solution of

social problems and to take a role in the reorientation of the social sciences. People

who have been the object of study, will make themselves knowledgeable by research

in their own society, will dismantle the objectivity of the specialized academic system,

and will reconstruct research designed for, rather than against, the people. Going

beyond the classical framework of social science since the 19th century, participatory

research will grow rapidly to answer the demand of a new era while transcending the

subject/object dichotomy.

Participatory studies for inter-community affairs (cross-civic relations) are a

social science that deals with problems spreading beyond the boundaries of nation

states such as ethnic problems (both minority groups within a nation state and ethnic

groups beyond national boundaries), modes of development (for both depopulated and

overpopulated areas), environmental problems (with regard to both waste disposal and

resources management), regionalism (tendencies for federal formation and community

orientation), economic organizations (new forms of co-operative enterprises), peace

movement (disarmament and peace keeping systems), human rights (freedom from

discrimination based on birth place, nationality etc.) and gender issues (reflections

on the social relations of men and women ). A new research institute for people based

studies should be established so as to organize research in the above mentioned inter-

community issues. Through this venture, we must build a study of people to people

relations, which is a new fi eld of study demanded by our new era.

The market economic system has embodied a sense of liberty in modern civil

society since the industrial revolution in the 19th century. The planned economic

system has advocated equality among the working classes since the socialist

revolution of Russia and China in the 20th century. A new people based economy will

－ 28－

Hisashi Nakamura

bring out a sense of fraternity in the human community through local self-reliance in

the coming century. Local economic self-reliance is based on three major factors, that

is to say, the sustainability of the cycle/recycle process, the development of diversity

and the creation of interrelationships. The dominance and subordination by the

political powers with military supremacy prevented common people from promoting

the establishment of the third economic system, which would supplement some

important shortcomings of the existing market and planned economic systems. The

following passages highlight important points of theoretical argument presented in

the Japanese book of mine 4.

The economic process of human life consists fundamentally of the circularity,

diversity and relationship. The more cyclical, diversified and inter-related human

life is, the more sustainable development will be in the coming generations. However,

the existing indicators of economic development do not differentiate between circular

and throughput, diversity and uniformity, and social relations and commoditization.

The latter set of features characterizes economic process in Japan and generates

advantages that make it supreme in market competition, it but tends to cause serious

environmental destruction. Until and unless people come to realize the importance of

the former set of features in economic life and proceed to establish more satisfactory

indicators of sustainable development, the self-reliance of the local economy will be

overwhelmed and disintegrated by market forces and state power.

The sustainability of the material circular flow is indispensable for future

environmental conservation in the world. We have to learn from the efforts made

against the gravity of the earth by salmon or eels who carry non-organic nutrients

accumulated at the bottom of the Pacifi c and Atlantic oceans up rivers on to the land

surface, so that they may keep up the cycle or recycle the fl ow of nutrients required

for the existence of other living systems on the earth. Far from doing so, our modern

civil engineering works have destroyed the ways used by salmon or eels through

the construction of dams and weirs in order to promote the one way movement of

economic goods. The modern transportation system needs to be altered in a way

that would discourage the distance which heavy commodities are transported, while

encouraging global human interaction and travel. Study abroad, overseas technical

training, marriage beyond national and ethnic boundaries, adoption of foreign

children, religious pilgrimages and other types of non-commodity human exchange

should be made accessible to everyone. For that purpose, economic reforms must

4 Hisashi Nakamura, Tiiki Jiritsu no Keizaigaku (Economics for Regional Independence), Tokyo: Nihon Hyoronsha,1998 The Korean edition was published at the same time with the Japanese book.

－ 29－


increase freight charges and lower passenger fares.

As for the creation of relationships in the field of economic activities, a new

alternative conceptualization of environmental pollution is fundamentally important.

For example, mud soil needed in paddy-fi elds though very dirty at wedding ceremony

just like petroleum needed in the motor car industry of 20th century though rejected

as the cause of pollution in Kyoto Protocol of COP3. In our people-oriented economy

all the industries are classified into three alternative categories according to their

basic relationship with local communities, as follows:

(a) Living system related industries run by the community sector (including

agriculture, forestry, fishery, animal husbandry, food processing, internal trade,

hospitals, kindergartens, elementary schools, funeral services, land management,

water supply and drainage, internal finance, waste treatment, local police, fire

brigade etc.).

(b) Industries catering to outside population and run by the private sector (production

meant for the market, mining and manufacturing industries, handicrafts,

souvenirs, travel agencies, tourist hotels, long distance trade, mass-communication,

newspapers, publishing press etc.).

(c) Inter-community industries run by the public sector (air lines, marine transport,

railways, highways, canals, telecommunications, postal service, electric power

supply, energy resources management, environment management, higher

education, academic exchange etc.).

The activities of people in the local community are becoming increasingly

diversified and multidimensional through the participation in many kinds of

organizations by a single individual. The conventional decision making procedures

in co-operative societies (i.e. one vote per member) is no longer ideal nor realistic

at all since most individuals are members of several societies, and attach unequal

importance to the different societies. Voting rights may be given according to the

average number of hours per week spent by the particular member on the particular

activities. At the same time, more and more decentralization of co-operative

management would be imperative and diverse self-management units should be

formed for substantial democratization.

A people-based economic order could exist in a community where landed property,

labor power and credit are gradually decommoditized, and ultimately cease to be

a commodity sold in the market. One long-range goal is to place all land resources

under the control of the local autonomous body. Labor forces are to be mobilized by

co-operative self-management enterprises. Local government will issue internal

local currency (a kind of prepaid cards) and systematize the circulation of the funds

－ 30－

Hisashi Nakamura

needed for local investment. Inter-community organizations will play the role of

currency exchanger for currencies between community and external currency, and the

experiences of Islamic banks could be useful in minimizing interest rates.

In English, it is translated into “manysidedness of reality.” For the cross-civic

studies, the idea that the truth is not only one is very important. It is a study of

processes to tackle various kinds of real problems. We cannot say that we have found

solutions or we have made clear the truth. It is just a process of repeating to overcome

diffi culties.

3. Indicators of Poverty in International Comparison

The conceptualization of poverty has been focal point of political economy since

the inception of social sciences in 18th century. Many attempted to shed light on

diverse aspects of poverty, particularly concerned with the way how to measure the

level of poverty. Of course, monetary measurement in terms of the GNP per capita

has been the prime indicator for economists. In addition to it, certain basic needs like

nutritious foods, decent clothes, durable habitat are considered essential for poverty

reduction.

The World Bank (IBRD) considers the above indicators too narrow as proper

measurement of economic development in international comparisons, and tries to

incorporate life expectancy and literacy criteria as well. The UNDP is still unsatisfi ed

even with that attempt and compiles Human Development Indicators every year, in

which countries are ranked in descending order of their human development index. In

the latest report, the profi le for developing countries consists of the following items,

which are different from the profi le for industrial countries5;

(a) population with access to health services (%)

(b) contraceptive prevalence rate (%)

(c) maternal mortality rate (per 100,000 live births)

(d) adult consumption of spirits per capita (litters) and adults who smoke (%)

(e) population per doctor and nurse and public health expenditure (as a % of GNP)

These indicators are still insuffi cient to measure the economic welfare of human

beings in a broad sense, not because Japan is ranked top in the human development

index list, but because economic life cannot be separated from every other aspect of

human activity. Instead of the development indicators devised by the World Bank

and UNDP, a set of people centered indicators must be compiled on the basis of the

5 UNDP, Human Development Report, New York: Oxford University Press, 2000.

－ 31－


sustainability of circulation process, the development of diversity and the creation

of human relationship. In view of the people-oriented economic order, the economic

welfare of people can be measured by the extent of self-reliance and fulfilled life

activities.

Thus, the main negative aspects of economic life of people in a particular locality

may be indicated as follows;

(a) ratio of disassociation from the stationary reproduction rate of population

(b) ratio of patients isolated in mental hospitals out of the total population

(c) ratio of suicides due to economic diffi culties out of the total population

On the opposite end of the spectrum, positive aspects may be identifi ed as follows;

(a) ratio of material cycle (ratio of incoming goods to outgoing goods)

(b) ratio of participation of handicapped people in social activities

(c) ratio of voluntary workers out of the total population

After all, welfare is not a part of human life but an entity covering all the

dimensions of the life cycle of mankind. And any damage to the life of an individual

person diminishes the welfare of all fellow members. Therefore, economic well-being

must be strongly integrated with the diverse effl orescence of social and cultural life of

the people. When the economy is properly embedded in a sound socio-cultural base of

the human community, the poverty level may not be judged by a set of index, but by

the nature of the social relations among people concerned.

Buddha preaches that the foolish people watch only an index finger when the

moon is pointed out6. Modern economists are so foolish that they are concerned with

index all the time and keen to create a new set of indicators. Amartya Kumar Sen

joins Buddha and preaches economists the need of having broader perspectives to

understand many aspects of reality.

4. Commerce and Communication across the Oceans between Equal Partners

We have to admit that the market system is not only very powerful as an

economic force but also very signifi cant for supporting cultural interchanges among

human communities in different areas on the global map. Long distance trade

relations between ancient China and Rome did not bring out any exploitation at

6 Nakamura Hisashi, “Sankagata Gakumon toshiteno Minsaigaku to Kaihatsu · Sabetsu” (Minsaigaku and Development and Discrimination from the perspectives of Participatory Research) in Hiroshi Sato (ed.), Sankagata Kaihatsu no Saikento (Reassessment of Participatory Development), Tokyo: Asia Keizai Kenkyusho, 2003.

－ 32－

Hisashi Nakamura

either side, but materialized the exchanges of different cultures. Very unfortunately,

however, European trade relations across the oceans since 16th century brought

out the exploitation of people at the other side of the world. There must be certain

fundamental regulations to limit commoditization in the constructing of a self-reliant

economy.

In a people based economy, all tradable commodities in a market transaction

must consist of items as follows;

(a) be reproducible by human labor. Landed property, labor power and credit are

not reproducible by labor itself, but are the merely institutionalized forms of social

relations among people concerned. Blood and human organs are not reproducible

using human labor either.

(b) be produced for the sake of sale. Food grains are originally produced to feed

producers themselves, their families, relatives and people in the same locality. Only

when surplus grains is available, it is sold in neighboring markets.

(c) not be harmful to human life. Presently, agro-chemicals whose sale is forbidden in

the market of the producing countries because they are harmful to human organisms

are still exported to some developing countries. Such trade should be prevented so as

to make such goods non-exportable even to the third world. This is the principle to

prohibit the trade of arms and weapons.

The concept of war or conflict is often placed at the opposite pole of peace,

therefore, peace is commonly misinterpreted as the non-existence of violence in our

world. Peace is, however, a twin brother of war, or at least a part of war which may

be fought in diverse ways. Every kind of the peace does not rest on the opposite

spectrum of war, but is closely related with war in the arena of world politics. As is

well known, all wars represent the destruction of human life through the exercise of

military power, and accordingly all peaces as fellow partners of wars represent the

control of human life in any society with military and police power. Thus, both have

been supplemental to one another in the history of sovereign state formation, at least

in the Western context.

Pax Romana was the military and political order maintained by Roman forces.

The ancient Chinese term for peace meant the pacification of revolting uncivilised

people by the mighty state power. The Pacifi c Ocean is the largest sea on our planet,

pacified by the Invincible Armada of Spain in 16th century. Pax Britannica was the

world political order around seven seas achieved by the formidable British Navy in

the 19th century. And Pax Americana is the contemporary world order controlled by the

dreadful nuclear weapons system of the USA. Throughout our historical experiences,

war has tended to destroy the other party as the enemy, and peace has tended to

－ 33－


suppress the other party as the disobedient.

Violence (including discrimination) and commerce (including cooperation) among

mankind have been at the opposite ends of the spectrum of human activities since

the use of fi re. The prime objective of violence is the destruction of human relations

in a given society, and that of discrimination is the rejection of human relations

between equal partners. On the other hand, every kind of commerce and cooperation

aims at the effl orescence of social relations. Very unfortunately, however, the nature

of technological development in the previous century has made it possible to such

extreme extent to eliminate the entire human population within an hour or two

through the nuclear weapons system. As a result of this, the last century was an era

of massacre on the ground of justifi ed wars and revolutions. The economic sciences

have been partly responsible for these sad affairs to a large degree although any

schools of economics are reluctant to admit it.

At the opposite pole of war, on the contrary, we should find such positive ways

to diminish the extent of conflicts as communication, consultation, commerce,

compromise, cooperation, coordination and so on. In this context, equal partnership

is the base for the development of collaboration between conflicting parties. People

have to open doors and meet together on any possible occasion in spite of the vexed

and accumulated antagonism in the long history of confrontation. Although we may

not be able to dream of the world without any war, violence, or confl ict as a part of the

ecological system on our earth, still we can make every effort to reduce the level of

violence. If non-violent practises are to be meaningful for mutual cooperation among

the people concerned at all, the way of participatory study and development must be

to promote interchange from the inside as well as exchange from the outside.

The idea mentioned above came to my mind while I was listening to Korean

Poet Kim Chi-Ha on the significant role of Shinshi in Asian Society as a mode of

interchange of human activities. Commodity exchange through the market system

has been very useful for the development of cross-cultural relations in many Asian

regions. We have to admit that the market system is not only very powerful as an

economic force but also very signifi cant for developing communication, consultation,

commerce, compromise, cooperation, coordination and so on. Since the Pax Romana

did not reach Ancient China, and Chinese peace never attempted to suppress the

Ancient Roman Empire, neither war nor peace existed between them. Yet, commodity

trade through the Silk Road or Indian Ocean contributed to the cultural heritage at

both ends. Very unfortunately, however, European trade relations across the oceans

since the 16th century brought about the exploitation of people at the other side of

the world. There must be certain fundamental regulations to limit commoditization in

－ 34－

Hisashi Nakamura

the constructing of a self-reliant economy and cultural cooperation.

Beyond market and planned economy, reciprocal interchange system has played

crucial role in rural Asia It has not been limited to the activities within the community.

Irrigation and drainage works to cover a broad area and water distribution among

related villages are coordinated by non-market agreements. Likewise, marriages with

distant villages give a good indication of interchanging labour forces between villages.

These non-market links among villages have been broader and more durable than the

use of money, and have brought about a degree of regional integration, preventing the

isolation of a particular village. Unlike the Market economy this reciprocal interchange

strengthens intra- and inter-village solidarity.

5. Modernization of Japan as a Negative Example

In the 16th century, Japanese way of development faced the very significant

turning point when the political authority was compelled to close the door to overseas

trade activities at the advent of Western powers along with Christianity except

the tiny Dejima port in Nagasaki, Kyushu Island. During the entire Edo period

since then, all the developmental efforts were concentrated in the field of land

improvement with the combination of the stored and the perennial irrigation systems.

The large river basins like Tone, Shinano, Kitagami etc. were transformed into the

newly created rice fi elds through the joint ventures of ie (family) and mura (village)

organizations in case of small projects, and supported by the feudal lords in case of

large projects. This way of massive investment only in the land development was the

base for the later economic measures taken in the modernization period. This is why

agriculturists were given higher social position, next to the samurai ruling class, than

the fellow artisans and traders in the rural community.

On the other hand, those who were not engaged in agriculture related activities

in rural area were badly discriminated at the bottom of social hierarchy while being

addressed as eta and hinin. Villagers dealing with carcasses of cattle, skin and hide

industries, executioners, hunters, mint workers etc. were regarded as the lowest social

classes by the feudal rulers. Thus, the modernization of Japan started without the

concept of civil society, but inherited the strong propensity to civil engineering works and

social discrimination against non-agricultural villagers. Although the Meiji government

attempted to liberate eta and hinin people no serious effort was made to eradicate social

discrimination. Most of them have kept on leading the lives of worst housing conditions

with lowest income compared with surrounding residents in the same locality.

－ 35－


The official registration of family records called koseki began and the choice of

jobs according to the skill and will and migration in any part of Japan was liberalized

on this recording system, which led to the labor market. However, this has been

another source of social discrimination in modern Japan. Although many people left

leather related industries of their original village and moved to different parts of

Japan, still discriminations, for example at the time of marriage, continued because

of the family record system even after several generations of migration. Since the

colonial annexation of the Korean Peninsular, Korean people were also forced to have

similar family records under Japanese rule. Some of them were compelled to migrate

to Japan as cheap labor forces after their landed property was taken away by the

ruling Japanese and formed the modern slum areas of major cities along with the

discriminated Buraku people in 20th century. The following passage is a rough sketch

of the modern history of Japan, in which Buraku and Korean minority people have

been kept to work mostly as manual laborers at the bottom of the social hierarchy.

The century of “kaisha” without civil responsibility, Datsu-a-ron (de-Asianization)

and Datsu-no-ron (de-agriculturization) coined by a leading economist in Meiji Period,

Fukuzawa Yukichi dreamed of by the followers of him. Industrialization started with

the slogans of Fukoku-kyohei (wealth of nation state and strengthening of military

forces) and Wakon-yousai (Japanese spirit equipped with Western science and

technology). Hokkaido and Okinawa were conquered and colonialized at the inception,

and from those experiences the Japanese model of nationalism was combined with

industrialism, militarism, colonialism and fi nally imperialism. For about one century,

many wars were fought as Sino-Japanese war, Russo-Japanese war, World War 1 and so

on. Each war witnessed the acceleration of industrialization and in spite of the defeat

of militarism at World War 2 (Hiroshima and Nagasaki), this model was maintained in

the process of the economic reconstruction through Korea and Vietnamese Wars.

The formation of Kaisha Shakai (company-based society) from Mura (village)

organizations were promoted along with number of Westernized institutions such

as military forces (French army and British navy), public education system (great

emphasis on elementary and middle schools), medical care system (prohibition of

non-Western medical practitioners), local governments (implementation agency of

the central government), co-operative societies (substitutes of public and private

sectors) etc. The Kaisha is the meeting point of Japanese and Western institutions. To

some extent, Japanese experiences in military organizations were also made use of

Japanese mode of management

Since the advent of Buddhism to Japan through China and Korea in the 6th

century, intellectual history in Japan has recorded great respect toward the South

－ 36－

Hisashi Nakamura

Asian culture. During the period of modernisation in the late 19th and the early 20th

century, Japanese leaders tried to follow the European way of social and economic

development through nationalism, industrialism, militarism, colonialism and so on.

After the catastrophic experiences of Hiroshima and Nagasaki in 1945, the resurgence

of the Asian value of the non-violent way of life has been recognized as manifested in

the present Constitution of Japan.

The preamble of the constitution states; “We, the Japanese people, desire

peace for all time and are deeply conscious of the high ideals controlling human

relationship, and we have determined to preserve our security and existence, trusting

in the justice and faith of the peace-loving peoples of the world. We desire to occupy

an honored place in an international society striving for the preservation of peace,

and the banishment of tyranny and slavery, oppression and intolerance for all time

from the earth. We recognize that all peoples of the world have the right to live in

the peace, free from fear and want.” And Chapter II of the constitution declares the

renunciation of war with “Article 9. Aspiring sincerely to an international peace based

on justice and order, the Japanese people forever renounce war as a sovereign right of

the nation and the threat or use of force as a means of settling international disputes.

In order to accomplish the aim of the preceding paragraph, land, sea, and air forces,

as well as other war potential, will never be maintained. The right of belligerency of

the state will not be recognized.”

This is what we learned from South Asian wisdom. In short, both sides of South

and East Asia share the common goal of humanity. In 1949, Indian Prime Minister

Jawaharlal Nehru donated two Indian elephants to the Ueno Zoo in Tokyo. This

brought a ray of light into the lives of the Japanese people who still had not recovered

from Japan’s defeat in World War II. Japan and India signed a peace treaty and

established diplomatic relations on 28th April, 1952. This treaty was one of the

fi rst treaties Japan signed after the World War II. Japan’s relation with the rest of

the South Asian nations has been set according to the Indian example in a similar

manner, and kept up, more or less, friendship, though not very close.

Three kinds of scenarios for Japan’s economy could be formulated and examined

while the roles played by Japan being taken into consideration from the viewpoint of

future relationship with the rest of Asia.

(1) He (Hyper-expansion)

In this scenario, Japan will have ever-increasing share of production, trade and

investment in the global economy to emerge not only as a leading force in Asia but

also as a superpower (pax japonica or pax nipponica) in the world. Japanese Yen will

－ 37－


replace US dollar as key currency for the settlement of international transactions.

For the achievement of this ambition, Japan needs rearmament with sophisticated

nuclear weapon system.

(2) Sa (Structural adjustment)

In this scenario, Japan will encourage more domestic economic activities through

fi scal and monetary policies than external investment and trade expansion in order to

cater to the needs of aging society. Japan may play some roles of an economic engine

only within the framework of global fi nancial system guided by USA and her allied

forces.

(3) She (Sane, humane and ecological)

In this scenario, Japan will gradually de-commoditize of landed property labour-power

and credit in the market, and look forward to the way of de-development in certain

industries that are environmentally destructive. The local economic self-reliance

should be pursued through the decentralization process of political, social and

cultural activities. In Asia, Japan will be a common member of regional organizations,

not to play a leading role as she wanted in the past. With the idea to step forward to a

sane humane and ecological way of Japanese life, we have to collaborate with people

based co-operatives in Asia.

6. Concluding Remarks: Lessons from Ishigaki Island

The Ocean is the source from which Life flourishes. The Earth’s small-islands’

communication tied together Life across the Ocean’s seven seas. This communication

also facilitated the blossoming of each island ’s culture. Every island was

simultaneously a part and the center of this comprehensive communication network.

This maintained the equitability of each small island; no fi xed minority nor majority.

The islands’ rich environment supported the circularity of life. People lived enriched

lives brought by the fruits borne of the sea and of the land. This comprehensive

communication network of small islands not only in Japan but all over the world,

near and far, led each people to their own self-reliance.

Now, at the beginning of the twenty-first century, global non-nation state

activities are paving the way for wider networking activities. They include all

organizations, non-governmental or non-profit. The scope of these organizations is

diverse, ranging from local governments that work for their people to those which

－ 38－

Hisashi Nakamura

focus on the international frontier. From the beginning, the critical role of co-operative

principle will play in the medium for change. New co-operative networking efforts

are located outside of the framework of the modern nation state, just as small islands

were in the past; the unique positions and roles of them manifest the potential to tie

together life across the globe.

This tie, in turn, should support the self-reliance of people, just as the

comprehensive communication network of small islands did before the modern nation

states were established. This communication of island people will bring us beyond the

bounds of modernization. Yaeyama people have substantial, historical experience to

become, together with co-operative movements from all over the world, a part and the

center of the new dawn. Multi-dimensional communication that not only permeates,

but also dissolves nation state boundaries is the fi rst step for small islands to revive

their self-reliance. All islands that protest against marginalization will walk together

in the communication network for the sake of realizing their self-reliance.

When Japan put enormous efforts into public works such as developing newly

reclaimed rice fields, people in the Ryukyu Archipelago developed relationships

through trading goods with people in China and in Southeast Asia and entered

into a full-fledged trading era. Okinawa, after being returned to Japan, has been

strongly affected by a number of public works originated from the main land Japan.

Meanwhile, cultural heritage as well as ecology is being destroyed. When one

considers the situation, the richness that trading can produce re-introduces to us the

importance of re-examining the Southeast Asian nature of Ryukyu Kingdom. As our

thoughts turn towards the history of the Ryukyu Kingdom and broaden our outlook

South, we may gain a new worldview. If NGO activities can destruct The Nation-State,

the social construct of society in the nineteenth century, Yaeyama, a marginalized

community in modern Japan, can become a part and the center of the new dawn.

Issues derived from the land have to be dealt with as social relationships that

people create, rather than as nature. One remarkable case can be drawn from the

burial site of the (19th century Chinese) Chin Dynasty people in Ishigaki. The

memorial site solidifies the hospitality with which the Ishigaki people treated 410

Chinese coolies who were sold to the US gold mines as the substitute of slaves one

year before Commodore Perry came to Japan in 1854. Those coolies made rebellion

against the captain and his crews in the commercial vessel “Robert Baum” while

anticipating the fate of slavery in the West Coast of USA.

After killing the captain and some followers of him, they arrived at Ishigaki

Island to seek shelter. Upon obtaining the information on the rebellion, British Navy

and US Navy sent their war ships respectively to the island to capture the coolies and

－ 39－


landed with the fi rearms. Most fugitive coolies were hiding themselves in the jungle

with the fear that they may be executed on return to the original port of South China.

About half of them were massacred by the mopping up operations of both navies.

Then, people in the island tried to appease British and American Navies, offering

drinking water, fi re woods, chicken, buffalo meat and so on, and saved lives of nearly

200colies. Finally, Ishigaki islanders sent back most of those Chinese coolies to their

original villages after they had negotiated with the then Chin Dynasty offi cials and

accommodated them in the islanders own ships

Compared with the fl ustered Japanese government’s dealing with Perry, Ishigaki

people performed much well in caring for the Chinese coolies. This historical event

has been taught in schools of China and Taiwan. But, Japanese Ministry of Education

did not like to include it in the school textbooks although many pages were allocated

to the story related with the arrival of American Fleet (four warships). Very few

Japanese knows the Salatga that had come to Ishigaki one year ago was one of those

four war ships.

In 1992, when an epitaph on a monument was carved, the Japanese government

did not have an offi cial diplomatic relationship with the Republic of China. However,

the Mayor of Ishigaki openly carved words of thanks to “The Republic of China.” This

carved epitaph played a role to openly declare that the local self-governing body in an

NGO. Along this line, Yaeyama people organized themselves without any involvement

of Tokyo-ites or outsiders and went directly to aid the Taiwanese when they suffered

from the Taiwan Earthquake in 1999. In this way, Yaeyama has developed solidarity

with Southeast Asia. As people in Ishigaki did in 1852, the going beyond the limit

of the modern nation states can be attained through the networking activities that

peoples’ cooperation and local self-governing bodies develop as they permeates and

dissolve nation states boundaries.

At the beginning of 1990s, the Ministry of Health in Tokyo decided not to extend

any public medical assistance to the undocumented foreign workers who deadly

needed the medical care due to serious accident or grave diseases after working for

the economic benefit of Japanese people. Most of them have been employed in the

industries which Japanese workers tried to avoid because of the nature of 3D (dirty,

diffi cult and dangerous) works. Japanese industries request the labor forces of sturdy

foreign workers in aging society, but not fellow human companions as equal partners.

Contemporary policy makers in Tokyo have to learn from the sane, human and

ecological way of life among Ishigaki islanders in 1850s to develop healthier social

relations with neighbouring people in Asia.

Lessons learned from the Ishigaki islanders direct us the way of an alternative

－ 40－

Hisashi Nakamura

development relying on the elaborate cooperation within local community and also

with outside experiences. Local self-reliance can be pursued through the collaboration

with those who come back from the diverse experiences in distant communities as

well as those who bring fresh interventions from outside.

The level of self-reliance will be higher when people depend upon more outside

supports than the isolation or the dependence on a single factor. If we depend on

only one person, an institution or one system, our life has to be subordinated and

controlled by a single force. The more diversified factors we depend on, the higher

level of self-reliance will be attained among us. All the development plan and confl ict

resolution requires the support from outside. This is what we learn alsofrom the

Buddha’s Magga.




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－ 43－

Can Agricultural Economic Activity Strongly Reduce Rural Poverty in Indonesia? Evidence from the Cocoa Smallholders*

Muhammad Arsyad**Rahim Darma***

1. Issue and Objective

Although the rapid expansion of Indonesian cocoa production has been mainly

contributed by the smallholders (more than 90% in 2005), the proportion of cocoa

smallholders whose income falls below the “official” National Poverty Line still exists

in two ways. Firstly, cocoa smallholders are originally poor. Secondly, the smallholders

were moving out of poverty then fell into poverty again causing low purchasing power.

Besides, some remaining crucial issues which are strongly associated with poverty

reduction for cocoa smallholders stay behind. They are; (1) the difficult aspect to

improve income of cocoa smallholders through the agricultural and non-agricultural

economic activities still becomes the classical problem challenge in the country; (2)

the average size of agricultural land ownership can not be expected to increase their

production; (3) cocoa smallholders suffer from inavailability of farm credit scheme

for their farming; as a result, they don’t have options to finance their production,

daily life desires except for lending capital input (money) from the brokers which

* This is a revised version of paper presented at the International Seminar on Participatory Research for Poverty and Confl ict Resolution, organized by the Afrasian Center for Peace & Development Studies, Ryukoku University, Kyoto, Japan on December 6, 2009. We would like to extend our sincere thanks to Professor Yoshio Kawamura for his invaluable solution in employing Factor and Path Analysis. We especially also thank to Professor Muslim Salam for his excellent adjustments on earlier drafts of the research proposal; Professor Saleh Ali, Professor Koji Tanaka and Mr. T. Temesgen Tilahun for their lively comments during the presentation of an earlier version of this paper.** Muhammad ARSYAD is an Agriculture Faculty Member at the Department of Socio-economics of Agriculture, Hasanuddin University, Indonesia and a doctoral student at the Graduate School of Economics, Ryukoku University [[email protected]] *** Rahim DARMA is Chair of the Agribusiness Study Program, Graduate School, Hasanuddin University and he has been a visiting scholar at Alabama University, USA since 2009.

－ 44－

Muhammad Arsyad, Rahim Darma

most of them are called ‘tengkulak’. Then the tengkulak’s money will repaid by the

smallholders in terms of cocoa products, but the price is determined by the tengkulak;

(4) the difficult access to social facilities such as education, public health services

and clean water resources causes low quality of their human resources in terms of

education attainment and health. Van de Walle (1992) also identified that access to

and utilization of public services has been a long standing issue in many developing

countries, and Indonesia is no exception. Here too, the dimension along which one is

concerned about utilization and access are between “poor” and “non-poor”, but also

along characteristics such as whether one lives in a rural or urban area, in Java or

the Outer Islands, and gender; and (5) the lack of access to market price information

for both farm input and output, agricultural extension, as well as non-agricultural

business opportunity. One of the possible negative consequences of these aspects is

that the smallholders are not able to expand their plantation area to improve their

income. In addition, the poor situation of cocoa smallholders is also exacerbated by;

firstly, the government policies -including monetary policy such as high interest rates-

were and still are, not suitable for the cocoa smallholder development in Indonesia.

Secondly, the low quality of Indonesian cocoa beans, especially which are produced by

the smallholders, is one of the crucial issues. Given the current situation, it is really

necessary to construct the research on poverty-smallholders linkages as a challenging

and interesting issue in combating poverty of cocoa smallholders in the country. Two

specific purposes of the paper are. The first is to measure the proportion of cocoa

smallholders whose income falls below the poverty line and how severe the poverty

situation is. The second is to compare the poverty situation between two villages in

Indonesia so that we are able to identify how different the poverty situation is.

2. Extracting Causality: Studies on Poverty

Poverty is multidimensional; it encompasses not only what is called income

poverty, i.e. deprivation of income/consumption such as the satisfaction of minimum

level of food and other basic needs, but also limited access to health, nutrition, and

education services, which aggravates the impact of income poverty, resulting in child

mortality, short life expectancy, and illiteracy. In addition, the poor are vulnerable to

shocks and risks and lack ability to cope with or overcome shocks. These individuals

suffer not merely from transient decline in income consumption and well-being

but also sink into deeper long-term endemic poverty. Different aspects of poverty

reinforce one another. In a wider sense, poverty basically connotes a lack of choice

－ 45－


and opportunities on the part of individuals to achieve an optimum exploitation or

use of their potentials or capabilities; it implies lack of empowerment on their part to

participate in or influence the decision-making process affecting their livelihoods and

well-being (Islam, 2006). All these indicate that poverty is a complex phenomenon

that can not be seen by one view point meaning many factors associated with poverty

itself, not only internal factor such as household human resource and production

factors ownership (say agricultural land for the poor smallholders), but also more

importantly the impact of external factors such as access to social services and

information availability on the community across developing countries in which

Indonesia is no exception. For the distribution of the benefits from social services

in Indonesia, Van de Walle (1992) in her study for the World Bank found that given

existing patterns of use, education spending is more efficient at directly reaching the

poor than is health spending. In the education sector, subsidies to primary and to a

lesser extent lower secondary education are most likely to reach poorer households

and raise their living standards. Education is potentially important conduit for

reaching relatively isolated rural households. Walle also gave a justification that

education subsidies effectively reach the poor for two reasons; poor families have more

children, and richer families self-select their children into private school. Meanwhile

in the health sector, subsidies to basic primary health care provide the best avenue

for reaching the poor, but they are far from ideal as an instrument for doing so.

The next important factor in identifying poverty causality is access to

information for the poor. So far, the study conducted by the CRIEC-World Bank (2002)

in Indonesia reveals the importance of information availability. It was found that 30%

of the households surveyed receive an income just sufficient for food requirement. The

poor usually come from farmers who are having lack of asset both land and equipment

as well as information (market, technology, capital and business opportunity). Then

the bank classified that the main factors determine the gap between the poor and

the rich are access to information. This is one finding. Another interesting finding is

from Kawamura’s study (2002) on poverty causal factor in South Sulawesi, Indonesia

by using an index “Transportation and Communication.” He found that “Radio

Communication Access” has no statistically significant path coefficient (βweight)

in relation to the “Lowest Income Level” as a poverty proxy in his study meaning

there is no direct impact on the poverty. However, “Radio Communication Access”

shows significant β weight in relation to the “Dependency on Agriculture” as one of

the intermediate variables in his work. Thus, “Radio Communication Access” will

eventually have indirect impact on “Lowest Income Level” or poverty through the

variable “Dependency on Agriculture.” Two studies above lead us to clearly say how

－ 46－


importance the information accessibility is in identifying poverty causal factors.

Another crucial dimension associated with poverty in developing countries

like Indonesia is both the role of agriculture and non-agriculture sectors in poverty

reduction. This is not without clear arguments. A number of important studies

support this aspect centers around a conclusion that the role of the sectors in general

and their linkage in particular are extremely important in reducing poverty. To

briefly justify this view point, some important studies that can be found in Kawamura

(2002), Sumarto & Suryahadi (2003), Said & Sallatu (2004), Salam (2006), and

Tambunan (2007). Kawamura in his estimation used the “Dependency on Agriculture”

as one of the important poverty causal factors in terms of “Lowest Income Level.”

He persuasively resulted a positive βvalue on this particular factor meaning the

more the households at lowest income level are in village, the higher the dependency

on agriculture is in the economic activity. This indicates what Salam found that the

agriculture sector (rice field production, cocoa production, on-farm labor and cocoa

plantation area) is one of the most important sectors in dealing with the poverty

in the forest community. Said & Sallatu also highlighted that the sector is one of

the possible important factors to help poverty reduction. These findings lead us to

accept Sumarto & Suryahadi’s findings that indeed agricultural growth has been

the most important factor contributing to rapid poverty reduction experienced by

Indonesia during the high growth pre-crisis period. In terms of poverty headcount,

agricultural growth accounts for 66% of total poverty reduction, 55% of urban poverty

reduction, and 74% of rural poverty reduction. In terms of poverty gap, agricultural

growth accounts for 51, 36, and 57% respectively of total, urban, and rural poverty

gap reduction. Meanwhile, for poverty severity only the reduction in rural areas is

calculated as only for these areas the coefficient is statistically significant. It appears

that 49% of reduction in poverty severity in rural areas is due to agricultural growth.

Tambunan’s study decomposes the percentage changes in poverty into three main

sectors in terms of their shares in total employment, namely industry (I), agriculture

(A) and services (S) in Indonesia. The result shows that the output growth in

agriculture appears to have the strongest impact (-10.04dYA) on the change in poverty

than those in the other two sectors (-2.56dYI and -1.82dY

S).

Smallholders indeed play an important role in encouraging Indonesian cocoa

production. The Indonesian Statistics for Estate Crop and Estate Development

Strategic Plan clearly show that the total production of cocoa at the national level

reached 536,804 tons in 2001 and 748,828 tons in 2005. Within this period, the

average growth of production was 10.49% per annum (the highest of 21.55% was

achieved in 2001). An interesting point is that most of this production (90.83%

－ 47－


per annum during 2001-2005) was produced by the Smallholders Estate (SE).

The contribution of smallholders to the total production reached of 88.85% or

around 476,924 tons in 2001 with growth by 23.76%, a substantial contribution for

Indonesian cocoa production. Meanwhile the remaining shares, 6.32% or around

33,905 tons (with negative growth by 2.61%) and 4.83% or around 25,975 tons (with

growth by 12.52%) are Government Estate (GE) and Private Estate (PE), respectively.

Up to 2005, these three categories of producer had a fluctuated growth, especially

GE declined of 24.17% in 2004 and PE of 9.53% in the same year. Fortunately, SE

persisted on its production growth by 11.69% per annum (2001-2005)--it was higher

than a national average of 10.49%--, while the GE had a negative growth (-6.77%),

although the PE also still had a positive way (4.62%). The turmoil situation above

reminds that the smallholders play a strategic role in Indonesian cocoa production.

This conveys a message that the rapid expansion of Indonesian cocoa production can

not be separated from smallholders. In other words, without having the comparative

advantage of cocoa smallholders, the Indonesian cocoa production growth can not be

expected to place Indonesia the third largest cocoa producer in the world. This implies

that poverty of smallholders could become crucial issues for Indonesian agriculture in

the future.

Using the Agricultural Censuses data, Booth (2004) identified that total incomes

from all sources are broken down into agricultural wages, other income from

agricultural activities, non agricultural wages, and various types of self-employment

activities in manufacturing and services. In addition, many households receive income

from remittances, pensions etc. In 1993, wages and salary earnings were the largest

single source off-farm earnings and non-agricultural wage earnings were greater

than those from agriculture. There is evidence of an inverted “U” relationship, in

that both agricultural and non-agricultural wages account for a higher proportion of

total agricultural household incomes for the middle income groups. All justifications

mentioned above leads us to hypothesize that the Dimension of Household Human

Resource, Agricultural Asset, Access to Social Facility, Access to Information,

Agricultural Economic Activity and Non-Agricultural Economic Activity affect poverty

of cocoa smallholders (Figure 1).

－ 48－


Figure 1: Hypothetical Model1

Note: 1) An arrow indicates a causal relation and a curve indicates a correlation; 2) Pjq is a path coefficient of X

j

on Xq, while r

jq is a correlation coefficient between X

j and X

q.

3. Methodology3.1. Research Site and Data Collection

The research was conducted in South Sulawesi Province, Indonesia. Two basic

criterions of the research site are needed. They are; (1) the average percentage of

cocoa smallholders and poor households for selecting district (Criterion 1), and (2) the

same percentage in cocoa smallholders, but different in poor households for selecting

village (Criterion 2). In order to reach these criterions, by putting the secondary data

into XY Scatter Plot, we got the research site (Figure 2 and Figure 3). Each figure

is divided into four Quadrants (I, II, III and IV) which have particular characteristics

regarding the cocoa smallholders-poverty linkages. Quadrant I indicates high

percentage in both cocoa smallholders and poor households. Quadrant II indicates low

percentage in cocoa smallholders, but high percentage in poor households, and so on.

The horizontal and vertical lines refer to their average. In Figure 2, there were 23

districts (‘kabupatens’) in the province. By Criterion 1, we selected Kabupaten Sidrap.

In Figure 3, there were 71 villages (‘desas’) in Sidrap plotted.2 Then, Desa Maddenra 1 The model in this paper was extracted from our previous publication to explain the different purposes, see for example Arsyad & Kawamura, 2009, pp. 1-27.2 There were 105 desa in Kabupaten Sidrap (data 2006), including kelurahan. Kelurahan is also the smallest governmental unit (just like desa) in Indonesia. However, generally desa is located in the rural area, while kelurahan is located in and near capital city. Therefore, access to information and public services (like education and public health center) are easier for the kelurahan residing. All kelurahan were excluded from the Scatter Plot to satisfy the Criterion 2.

Household Human Resource

(X1)

Agricultural Asset (X2)

Access to Social Facility (X3)

Access toInformation (X4)

Agricultural Economic Activity

(X5)

-Agricultural Economic Activity

(X6)

P O V E R T Y

(Household Incom

e, X7 )

P71

P51

P75

P61

P52

P62

r21

r31

r41

r32

P72 r56

P63

P53

P76P54

P64

P74

r43

r42

－ 49－


and Desa Compong were chosen to satisfy Criterion 2. We interviewed 70 households

in Compong (26.40 % of the total cocoa smallholder households) and 82 households in

Maddenra (28.20% of the total cocoa smallholder households) so that the total sample

was 152 households.

3.2. Analysis Methods

(i) Head Count and Poverty Gap Indices

The proportion of cocoa smallholders is living below the Poverty Line and how

severe the poverty situation is analyzed by using the Foster-Greer-Torbecke poverty

indices. They are the Head-Count Index (HCI) and the Poverty Gap Index (PGI):

NA

HCI = , where A is the number of household are below the poverty line, N is the

number of total households. ⎥⎦

⎤⎢⎣

⎡ −= ∑= Z

IZNA

PGI iA

i 1

, where Z is the Poverty Line (PL) and

Īi is average income of the households below the PL. We employ the 2006 National

Poverty Line (NPL) for rural area in South Sulawesi of Rp.98,946.00/capita/month

issued by CBS3.

(ii) Factor Analysis for Index Construction

Three subsequent steps are undertaken in Factor Analysis. They are; (1)

extracting factor to meet an initial solution or initial decision regarding the number

of inputted factors underlying a set of measured variables in each of the dimensions

studied by employing Principal Component Analysis (PCA) as an extraction method

(unrotated solution); (2) rotating factor by using Varimax Method--the most common

rotation method-- to create the results which are expected more interpretable as a

final solution. The consideration is that unrotated solution has unclear meaning,

while the rotated factor matrix provides the clear cluster of variables in the

dimension constructed; (3) constructing Factor Matrix to calculate “Index” as a new

set of variables to be regressed.4

3 CBS is Central Board of Statistics in Indonesia. The board also issued the NPL for urban area.4 For this purpose, we used SPSS Software to create factor score for all indices. See Arsyad & Kawamura (2009) for the procedure of index construction.

－ 50－


Figure 2: XY Scatter Plot for Selecting District or ‘Kabupaten’

Figure 3: XY Scatter Plot for Selecting Village or ‘Desa’

(iii) Path Analysis

Path Analysis (PA) basically is standardized General Multiple Regression

Analysis (GMRA). A multiple regression equation is a liniear model constructed by

a dependent variable and a set of explanatory variables (Kawamura, 1978:228) to

represent reality or phenomenon which can be formulated based on both theoretical

framework and emperical evidence. The fundamental different between PA and

XY Scatter Plot for Selecting Kabupaten

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

0.00 10.00 20.00 30.00 40.00 50.00

ercentage of Cocoa Smallholders

Perc

enta

ge o

f Poo

r Hou

seho

lds

I II

III IV

SIDRAP

XY Scatter Plot for Selecting Desa

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

100.00

0.00 20.00 40.00 60.00 80.00 100.00

Percentage of Cocoa Smallholders

Perc

enta

ge o

f Poo

r Hou

seho

ld

III

III IV

COMPONG

MADDENRA

－ 51－


GMRA is only the nature of data. The data used in PA is standardized.5 Therefore,

the assumption used in PA principally is the same as GMRA assumption. The general

model of Path Analysis;

　　　Yt = β

1X

1t +β

2X

2t +... +β

kX

kt + E

t , for Y

t, X

it are standardized and t = 1, 2,…

, n yields the following form:

　　　Yt =

⎟⎟⎠

⎞⎜⎜⎝

⎛∑=

K

qqtq X

1

β + Et in which the direct impact of the independent

variables on each of its respective dependent can be estimated by path equations:

X1 = E

1 (Path Equation 1, PE 1)

X2 = E

2 (PE 2)

X3 = E

3 (PE 3)

X4 = E

4 (PE 4)

X5 = P

51X

1 +

P

52X

2 + P

53X

3 + P

54X

4 + E

5 (PE 5)

X6 = P

61X

1 +

P

62X

2 + P

63X

3 + E

6 (PE 6)

X7 = P

71X

1 +

P

72X

2 + P

74X

4 + P

76X

6 +P

75X

5 + E

7 (PE 7)

The above equations yield a general form, j

k

qqjqj EXPX +⎟⎟⎠

⎞⎜⎜⎝

⎛= ∑

=1 for (k < j); where

Pjq is path coefficient of the independent variables and E

j is error terms. The estimated

values in each one of the above path equations can be obtained (from PE 5 to PE 7)

by the formula ∑=

<=k

q

jkjqXqPjX1

)(,ˆˆ ; where a hat (^) indicates an estimated value.

Thus, a path coefficient Pjq is a standardized regression coefficient, which is b

jq*(S

xj/

Sxq

). In this case, bjq is an unstandardized regression coefficient, while S

xj and S

xq

are, respectively, the standard deviation of Xj and of X

q (see Kawamura, 1978). This

solution leads us to test a Null Hypothesis (H0)

that “there is no significant impact of

independent variables on dependent ones”.

(iv) Test for Goodness of Fit and Significance of the Path Coefficient

For testing goodness of fit and path coefficient, we regress all indices on the

Poverty as dependent variable. In addition, we also regress all indices on each of the

intermediate variables so that the overall test for goodness of fit of the path equation

on the intermediate variables could also be identified.6 We used the advantage of

5 The formula for variables standardization (named Z-score tranformation) is shown as follows. This yields zero mean with a standard deviation of 1.0. This value transformation does not affect a correlation coeffi cient (Kawamura, 1978:220) which is given by:X where, X

i is an observation of the ith case in a variable X, ,/)( SDXXZscore i −= is a mean of

variable X, and SD is a standard deviation of a variable X. 6 However, the impact of independent variable on each of the two intermediate variables will not be discussed in this article.

－ 52－


SPSS Program in calculating the observed F-value and coefficient of determination

(R2) in testing for goodness of fit. The higher R2, the better estimates meaning the

model is fit. From this perspective, R2 heavily depends on the ability of equation

specification in explaining the reality. If the observed F-value exceeds the criterion

ones, we reject H0. The next stage was the test for significance of path coefficient,

whether the observed path coefficients differs statistically from zero (α= .10) by

using the t-ratio. In obtaining the t-value, we estimate the standard error of the path

coefficient (Sbi) a long with the path coefficient (P

jq) for each variable. If P

jq,/S

bi exceeds

the t-distribution, we conclude that (Pjq) differs significant from zero.

4. Results and Discussion4.1. Factor Analysis for Index Construction

The primary purpose of use Factor Analysis in this paper is to construct

representative factor for each of the six dimensions in two ‘desas’ (villages) which

then enable us to construct an index to be regressed. It was found that each of the six

dimensions (Household Human Resource, Agricultural Asset, Access to Social Facility,

Access to Information, Agricultural Economic Activity, Non-Agricultural Economic

Activity) has at least two representative factors as indices and at least one of the

variables strongly loaded on each representative factor.

4.2. Test for Goodness of Fit and Significance of the Path Coefficient

The overall test persuasively resulted in the rejection of H0 that “there is no

significant impact of independent variables on dependent ones” as a whole. This could

be proved that all path coefficients in the Path Equation (PE) 1 are zero. In addition,

it can also be identified that the significance test for each of the six path coefficient of

the intermediate variables lead us to reject H0 that “there is no significant impact of

the independent variables on intermediate ones”. The regression results show the R2

of each six path equations in Desa Compong. PE 1 is the path equation of the twenty-

one independent variables (including intermediate) on “Household Income (X7)” as

dependent variable in this step of analysis. The R2 of PE 1 reached 0.872. This figure

tells us that 87.20% of the total variance of endogenous variable (Household Income)

in general, can be explained so fairly robust by the all twenty-one explanatory

(independent) variables. Meanwhile, in Desa Maddenra, the R2 of PE 1 reached 0.814.

It means that 81.40% of the total variance of “Household Income” in general, can also

be explained so fairly robust by the all twenty-five explanatory variables. Thereby,

we may say that the model constructed through the six dimensions in the research

－ 53－


is more than adequate in explaining the poverty situation. In other words, all six

dimensions constructed (Household Human Resource, Agricultural Asset, Access

to Social Facility, Access to Information, Agricultural Economic Activity, and Non-

Agricultural Economic Activity) could be the important dimensions for the poverty of

cocoa smallholders. This also leads us to argue that all significant variables collected

could be the better direction for policy formulation dealing with poverty reduction in

Indonesia.

The last test was the T Test for the significance of all path equations based on

regression result. In addition, the number of significant path coefficient might also

help to identify the important explanatory variable. All path equations have at least

three significant path coefficients in which the PE 1 has 10 significant variables (X62

,

X61,

X53,

X52,

X51,

X37,

X33,

X32,

X31,

X24

) in Desa Compong and it has 11 significant variables

(X62m

, X

54m, X

53m, X

51m, X

42m, X

33m, X

27m, X

25m, X

22m, X

21m, X

12m) in Desa Maddenra.7

4.3. Poverty Causes: A Comparison of Two Villages in Indonesia

This section deals with a comparison of the poverty situation between two

villages or ‘desas’ and identifying important causes. A strong assumption here is that

it was found (through XY Scatter Plot of Figure 3) that some desas are of the same

in percentage of cocoa smallholder households, but they are different in percentage of

poor households including Desa Compong and Desa Maddenra where we conducted

the research. The calculation reveals that the Head Count Index (HCI) of Poverty in

Compong is .3428. It means that around 34.28% of the cocoa smallholder households

interviewed in Compong have an income/capita/month below the National Poverty

Line (NPL). Meanwhile the Poverty Gap Index (PGI) of the analysis is .10. It indicates

that the average income of smallholder households falls short from the NPL. This

situation is different from Desa Maddenra. The calculation reveals that the HCI in

Maddenra is .0731 meaning that less than 10% of the cocoa smallholder households

interviewed have an income/capita/month below the NPL. In fact, the average income

of all smallholder households interviewed in Maddenra is above the NPL resulting

the PGI of zero (0) meaning there is no poverty gap in the community. However, it

is important to emphasize that this finding should not be interpreted to mean that

there are no poor people there at all (as HCI revealed). The indices of PGI reveal that

the depth of poverty is, however, severer in Compong than Maddenra.

It is true that the Paired-Samples T Test (Table 1) shows that the average

household income was, however, higher in Desa Maddenra (compared to Desa

Compong), but it was just Rp518.67/capita/year or Rp43,250/capita/month (around 7 The PE 2, PE 3, PE 4, PE 5 and PE 6 are not shown here.

－ 54－


US$4.71/capita/month, $1=Rp9,167, rate in 2006) in mean difference so that allows

us in the acceptance of H0 that the population mean difference is equal to zero

meaning statistically there is no mean difference between these two desas in terms

of household income as a poverty proxy in the analysis. All these indicates that

the degree of poverty situation between Desa Compong and Desa Maddenra were

relatively the same. However, it is also true that they have a differentiation in terms

of income structure or component meaning poverty causes differentiation, not only

the magnitude but also the sign of causes itself.

Table 1: Paired-Samples T Test of Household Income between Desa Compong and Desa MaddenraPaired Differences

Desa Compong Desa MaddenraMinimum 4,600 4,600Maximum 62,500 76,850Mean 2.07E4 2.12E4Standard Deviation 15,372 12,939

90% Confidence Interval of the DifferenceLower -3449.642

Upper 4486.985

Mean Difference 518.671t .218df 69p-value .828N = 152

For comparison ways, we provide Table 2 and Table 4 to see the poverty causes

by different variable groups (intermediate and independent). We should emphasize

here that the variables collected among two ‘desas’ (villages) theoretically should be

the same for two fundamental reasons. Firstly, in constructing the hypothetical model,

it was obviously using the same dimension in identifying variables conceptually or

dimensionally for two desas. Secondly and most importantly, the instrument used in

collecting primary data (questionnaire) is also exactly the same, meaning variables

collected for each of the five dimensions between two desas should be also the same.

However, Correlation Matrix among variables in the beginning step of analysis

persuasively displayed some dimensions that yields the different variables collected

in two desas. In addition, Factor Analysis also reveals that even if we put the same

variables among two ‘desas’ (villages) in the analysis (Household Human Resource

Dimension for instance), but it still had a possibility to produce the different factors or

component resulting the different indices. This indicates that beside their similarity

as common factor, these two desas also have a different social structure based on

－ 55－


the dimensions constructed which creating the different poverty causes, not only the

magnitude but also the sign of causes itself.

At least, there are three ways to compare the poverty situation between two

desas as well as identifying important causing factors. The first is identifying the

common factors responsible for the poverty of two desas. In Table 2, it is clearly

displayed that the variable Government Transfer-Source Income appears to be

a common factor in each of the two desas. The meaning of variable Government

Transfer-Source Income is household income from the government (government

transfer). It is true that the Indonesian government has been providing, not only

financial support (cash transferred) to the poor household such as Social Safety

Net Program including Highest Oil Price Compensation to help them in daily life

desires, but also the government subsidizes agricultural inputs such as fertilizer and

chemical pesticide as well as farm equipment (especially paddy field) to the rural

smallholders in which these two desas (Compong & Maddenra) are no exception.

Therefore, it is a reasonable result that “Government Transfer-Source Income”

appears to be a common factor in explaining the poverty situation for the two desas.

This implies that the “Government Transfer-Source Income” can be significantly

expected to combat poverty in the country. The important question to be answered

here is that in which desa the variables have greater (important) impacts (direct and

indirect) on the poverty. As clearly depicted in Table 2 (intermediate variables group),

“Government Transfer-Source Income” appears to be a significant common factor in

explaining the poverty situation in two desas. It indicates that the positive impact of

“Government Transfer-Source Income” can be expected to reduce poverty in Compong

and Maddenra. However (in terms of direct impact), Compong receives positive

impact of “Government Transfer-Source Income” slightly higher (β=.167) than its

impact for Maddenra (β =.147).8 This implies that the role of “Government Transfer-

Source Income” in reducing poverty in Compong is more important than Maddenra.

However, specifically (Table 2), the orientation of cocoa production in agricultural

economic activity is strong and directly associated with the poverty in Compong (β=.557), while for coffee, cashew-nut and livestock productions are in Maddenra (β=.674). A major implication of this finding is that encouraging cocoa production in

Compong and coffee, cashew-nut and livestock productions in Maddenra in particular,

can be strongly expected to reduce poverty directly. Put it general ways. The variables

that have the strongest positive impacts or impacts directly in reducing poverty of

smallholders is “Cocoa Production” in Compong and “Coffee, Cashew and Livestock

Productions” in Maddenra. It conveys an important message that the orientation of 8 The intermediate variables don’t have indirect impacts on “Poverty.”

－ 56－


agricultural productions in economic activity (agricultural sector in broad sense) is

strong and directly associated with rural poverty phenomenon. This leads us to argue

that even if the agricultural sector is not a single factor to reduce poverty, but the

sector is considerably important in reducing rural poverty directly.

Table 2: Poverty Causes Comparison between Desa Compong and Desa Maddenra by Intermediate Variable

No Intermediate Variable(β weight) on the Poverty

Desa Compong Desa Maddenra1 Coffee and Orange Productions .377 *2 Clove Production and Livestock .195 *3 Cocoa Production .557 *4 Family Transfer-Source Income .258 **5 Government Transfer-Source Income .167 .1476 Coffee, Cashew and Livestock * .6747 Clove and Orange Productions * .2248 Cocoa and Irrigated Paddy Field Productions * .249

Note: * unidentified in the same cluster of variable; **insignificant; shaded area is common causes.

The second important comparison way is focusing on the variable which is

identified to influence poverty in one ‘desa’ (village) but it is unidentified and/or

insignificant for the other desa (the variable Family Transfer-Source Income, for

instance). The defenition of variable Family Transfer-Source Income is household

income from others household members who are working outside the country

especially Malaysia (resulting remittances) and the members who are working

outside the hometown for making money. However, the family transfer-source income

for household in Desa Compong is much more diversity, not only having the members

who work in Malaysia, but also other family members who have different type of

economic activities in hometown (such as be a social/private teacher, craftsman

and extracting rattan from forest, etc) for making money. Unlike Desa Compong,

the family transfer-source income for household in Desa Maddenra is more limited

by having the only remittance and to be farm laborers wage resulting the number

of smallholders who received family transfer-source income in two desas is also

different, as clearly depicted in frequency distribution of Table 3. In the table, it is

obviously that thirty-one out of seventy (44.29%) of smallholder households have

family transfer-source income in Desa Compong, while thirty-four out of eighty-two

(41.47%) in Desa Maddenra. Thus, in terms of percentage of household which have a

family transfer-source income, Compong is higher than Maddenra. This then, enables

“Family Transfer-Source Income (X61m

)” also appears to have an impact (βweight)

on the poverty of smallholders in Maddenra even though it is insignificant. This is a

－ 57－


reason why even though “Family Transfer-Source Income” can be one of the causing

factors of poverty in Compong and Maddenra (since the variable was identified in

two desas), however, the variable has a significant positive impact on Compong’s

smallholders only (β weight =.258 in Table 2). It is important to note that “Family

Transfer-Source Income” was also identified in Maddenra, but insignificant meaning

it still has an impact but insignificant. It doesn’t mean that there is no impact at all.

For this justification, we may say that the variable Family Transfer-Source Income is

also a common factor influences poverty in both Desa Compong and Desa Maddenra,

but the degree of the impacts or impacts are different. This implies that diversity of

family transfer-source income can also be expected to reduce poverty.

Table 3: Frequency Distribution of Family Transfer-Source Income of Cocoa Smallholders in Desa Compong and Desa Maddenra

Family Transfer-Source IncomeDesa Compong Desa Maddenra

Frequency % Frequency %Yes 31 44.29 34 41.47No 39 55.71 48 58.53

Total 70 100.00 82 100.00

The third crucial comparison is that the variables were identified in both

Desa Compong and Desa Maddenra, but the cluster of variable was different. For

example, (see Table 2), it is clearly presented that the variable “Coffee and Orange

Productions” was identified in Compong. However, one substantive question we might

rise is that even though “Coffee” was also identified in Maddenra, but why it was

not clustered with “Orange Production” (as Compong has), rather, it was clustered

with “Cashew and Livestock”. The same thing happens on “Clove Production and

Livestock”. Another crucial question is that why “Cocoa Production” appears alone in

Compong, but it was clustered with “Irrigated Paddy Field Production” in Maddenra.9

Besides comparison of those two desas by the intermediate variables, we will

also compare them by the independent variables group. However, for a variety of

reasons including general policy formulation, we will more focus on common poverty

causes comparison, especially “Cultivated Land Area”, Social Service Utilization”

and “Agriculture & Non-Agriculture Extensions”. It is clearly depicted in Table 4

that the variable Cultivated Land Area with Farm Equipment has, not only a direct

positive impact but also indirect ones. Its direct positive impact influences poverty

in Maddenra ( β =.373, a moderate impact), while for its indirect positive impact

influences the poverty in both Compong (indirect impact of .353) and Maddenra

(indirect impact of .078). A principal implication of this finding is that expanding

9 However, we will not answer these questions in this paper.

－ 58－


cultivated land area could be expected moderately to reduce poverty directly in

Maddenra. In addition, it also could be the next route to reduce poverty indirectly

for smallholders in Compong and Maddenra. However, it should be underscored that

its indirect positive impact on the poverty in Compong is four times higher than

Maddenra. This conveys a crucial message that expanding cultivated land area is

more important to consider in reducing poverty in Compong indirectly.10

Table 4: Common Poverty Causes Comparison between Desa Compong and Desa Maddenra by Independent Variables

No Independent Variable(β weight) on the Poverty

Desa Compong Desa MaddenraDirect Indirect Direct Indirect

1Cultivated Land Area with Farm

Equipment- .353 .373 .078

2 Social Service Utilization - -.061 .444 -.040

3Agriculture & Non-Agriculture

Extensions- .288 .276 -.191

Another common poverty causing factor is “Social Service Utilization”. Table 4

shows that the variable Social Service Utilization has a direct positive impact on the

poverty in Desa Maddenra (β=.444). In addition, it also has a negative impact on the

poverty in both Desa Compong (indirect impact of -.061) and Desa Maddenra (indirect

impact of -.040). These are also understandable facts. In Maddenra, social facilities

such as primary public health center (so called PUSKESMAS), junior high school and

public water for cooking are closer to smallholder residence compared to Compong’s

smallholders. For instance, as clearly presented in Table 5, the average of “DISTN_

EDUC2” (distance to the junior high school) in Compong is almost 4 km (Mean=3.57)

with maximum distance of 10 km (Max=10). Meanwhile in Maddenra, its average

distance to the school is less than 2 km (Mean=1.81) with maximum distance of 4

km (almost three times closer than Compong). We can also clearly see that even if

the average of “FRE_HEALT3” (degree of utilization of PUKESMAS) in Compong

(Mean=.27) is slightly higher than Maddenra (Mean=.191), however, Compong still

has a minimum degree of zero (Min=0) meaning there are smallholders who never

used PUSKESMAS in Compong (unlike Maddenra, Min=1). In terms of maximum

frequency, Maddenra has almost three times higher (Max=5) than Compong (Max=2)

indicating that the degree of utilization of PUSKESMAS as primary public health

center in Maddenra is more accessible. This statement can also be supported by

looking at “DISTN_HEALT2” (distance to auxiliary health center, so called PUSTU).

10 Indirect impact explained here is total indirect impact.

－ 59－


PUSTU is obviously unidentified in Maddenra. It is a general phenomenon that

PUSKESMASs in Indonesia are located in the capital city of sub-district (‘kecamatan’)

and/or village (‘desa’), but PUSTUs are located in remote rural area. In this particular

case, Compong is more remote rural area (having PUSTU) compared to Maddenra

which is closer to the capital city of kecamatan (having PUSKESMAS). Therefore, it is

a reasonable result that Maddenra’s smallholders receive the direct positive impacts

of “Social Service Utilization” with β=.444 (see Table 4) due to a closer distance to

those social facilities in general. However, it doesn’t mean that all smallholders have

better access. Frequency distribution shows that Maddenra still has 19% smallholders

who further from those social facilities (say “DISTN_EDUC2”--distance to Junior

High School-- of 4 Km as a maximum value in Table 5). This is a reason why “Social

Service Utilization” has, not only direct positive impact but also negative indirect

impact (even if in a negligible association of -.040) on the poverty in Maddenra.

Table 5: Descriptive Statistics of the Variable FRE_HEALT3, DISTN_HEALT2 and DISTN_EDUC2 in Desa Compong and Desa Maddenra

Desa Compong Desa MaddenraMin Max Mean SD Min Max Mean SD

FRE_HEALT3

(Times/month)0 2 .27 .588 1 5 1.91 .971

DISTN_HEALT2

(Km)0 4 .89 1.149 * * * *

DISTN_EDUC2

(Km).15 10.00 3.57 2.495 1 4 1.81 .873

Note: *unidentified

The last common poverty causing factor (see Table 4), is “Agriculture & Non-

Agriculture Extensions”. It has direct positive impact in increasing household income

meaning reducing poverty in Desa Maddenra (β= .276, a moderate impact). We may

say that the higher the frequency of getting the information of technology/agriculture

extension, non-agriculture jobs information and price information for input-output

in agriculture, the higher the crops productions (agriculture income) as well as non-

agriculture income will be gained, the more total household income will have, meaning

reducing poverty situation. This indicates that “Agriculture & Non-Agriculture

Extensions” can also be expected to be the next important variable in reducing

poverty directly after “Cultivated Land Area with Farm Equipment”.11 The important

implication is that expanding cultivated land area with farm equipment as well as

11 Note as well that this statement based on the positive moderate impacts directly, not across variables.

－ 60－


improving agriculture and non-agriculture extension services in Maddenra could be the

next important routes to help smallholders move out of poverty directly. In addition,

the variable Agriculture & Non-Agriculture Extensions also has positive impact in

reducing poverty in Desa Compong, however, in an indirect way (indirect impact of

.288, a moderate impact). The impact of “Agriculture & Non-Agriculture Extensions”

was transmitted to the poverty through the three intermediate variables (“Cocoa

Production”, “Family Transfer-Source Income” and “Government Transfer-Source

Income”) positively, so that the total indirect impact becomes positive (.288). This

implies that by providing agricultural and non-agricultural informations or extensions

in Compong, the poverty of smallholders can also be expected to cope with indirectly.

An interesting point is that the variable Agriculture & Non-Agriculture

Extensions also sends its indirect impact on the poverty in Maddenra, but in

a negative way. It is important to re-note that the variable Agriculture & Non-

Agriculture Extensions transmits its impact through the four intermediate variables

i.e. “Coffee, Cashew and Livestock (indirect impact of -.155)”, “Clove and Orange

Productions (indirect impact of -.045)”, “Cocoa and Irrigated Paddy Field Productions

(indirect impact of .039)” and “Government Transfer-Source Income (indirect impact

of -.030)”. After impacts decomposition, we found that the variable provides a negative

indirect impact (total indirect impact of -.191) to the poverty due to the negative

β weights of three intermediate variables mentioned above. Thus, even though

the variable transmits its impact positively on “Cocoa and Irrigated Paddy Field

Productions” meaning it has positive impact on cocoa and paddy field development

due to a suitable access to information and agricultural technology (properly

transferred and/or effective way in introducing technology by incentive), however,

the variable also sends its impact negatively on “Coffee, Cashew and Livestock”,

“Clove and Orange Productions” and “Government Transfer-Source Income”. In other

words, it has a negative impact on these three variables reducing household income

indirectly (in total indirect impact). This leads us to say that it can not be expected

to reduce poverty in Maddenra through the three intermediate variables mentioned

above. It implies that (beside cocoa and paddy field existing technology), providing

properly technology especially for coffee, cashew and livestock in Maddenra are also

necessary to optimize the role of agricultural technology or extension in alleviating

poverty indirectly.12 This is obviously different from Desa Compong which already

receives indirect positive impact of “Agriculture & Non-Agriculture Extensions”.

12 Indirect impact of “Agriculture and Non-Agriculture Extensions” on the “Poverty” through “Clove and Orange Productions” and “Government Transfer-Source Income” is a negligible association.

－ 61－


5. Concluding Remarks and Policy Implications

Some principal findings are; (1) the Head Count Index (HCI) of poverty in

Desa Compong reveals that around 34.28% of the cocoa smallholder households

interviewed in Compong have an income/capita is below the National Poverty Line

(NPL). Meanwhile, the Poverty Gap Index (PGI) of the analysis is .10. This indicates

that the average income of poor smallholder households falls short of the NPL.

This situation is different from Desa Maddenra. The HCI in Maddenra is .0731

which means that less than 10% of the cocoa smallholder households interviewed in

Maddenra have an income/capita is below the NPL. In fact, the average income of all

smallholder households interviewed in Maddenra is above the NPL resulting the PGI

of zero, meaning there is no poverty gap in the community. Finally, the indices of PGI

reveal that the depth of poverty is, however, severer in Desa Compong compared to

Desa Maddenra; (2) the degree of poverty situation between Compong and Maddenra

were relatively the same, but they have a differentiation in income structure meaning

poverty causes differentiation; (3) specifically, the orientation of cocoa production

in agricultural economic activity is strong and directly associated with the poverty

in Compong (β =.557), while for coffee, cashew-nut and livestock productions are in

Maddenra ( β =.674). A major implication of this finding is that encouraging cocoa

production in Compong and coffee, cashew-nut and livestock productions in Maddenra

in particular, can be strongly expected to reduce poverty directly meaning that

encouraging agricultural economic activity of smallholders can be strongly expected

to combat rural poverty in the country.

－ 62－


References

Arsyad, M. & Y. Kawamura, 2009. A Poverty Causal Model of Cocoa Smallholders in

Indonesia: Some Initial Findings from South Sulawesi. Ryukoku Journal of

Economic Studies, 49 (2):1-27.

Arsyad, M. & S. Yusuf, 2009. Poverty Causes - Cocoa Smallholders Linkages. Ryukoku

Journal of Economic Studies, 49(2):1-27.

Booth, A., 2004. The Changing Importance of Off-Farm Income for Agricultural

Households in Indonesia [in The Indonesian Rural Economy: Mobility, Work

and Enterprise]. Edited by Thomas R. Leinbach. ISAS, Singapore.

Center Research Institute for Estate Crops (CRIEC) & World Bank. 2002. The

Performance Analysis of Cocoa (Report Studies on Smallholder Tree Crops

Production and Poverty Alleviation). CRIEC-World Bank.

Islam, N., 2006. Reducing Rural Poverty in Asia: Challenges and Opportunities for

Microenterprises and Public Employment Schemes. Food Products Press.NY.

Kawamura, Y., 1978. Urbanization, Part-Time Farm Households and Community

Agriculture: Japan’s Experience after World War II. Ph.D. Thesis, Cornell

University.

Kawamura, Y. 2002. Role of Social Statistical Analysis in Participatory Rural

Community Development Programs for Poverty Alleviation; Case of JICA

Project in South Sulawesi, Indonesia. JICA Commissioned Research Report.

Said, A. & A.M. Sallatu, 2004. Incidence of Poverty Causal Model for Sulawesi Region,

Indonesia:A Path Analysis Based on Statistics “Potensi Desa’. Ryukoku

Journal of Economic Studies, 44 (1):27-49

Salam, M., 2006, Poverty Structure in Indonesian Forest Area: A Comparative Study

on Poverty Structural Causal Model of Forest and Non Forest Communities.

Ph. D. Thesis, Ryukoku University, Kyoto.

Sumarto, S. & A. Suryahadi, 2003. The Role of Agricultural Growth in Poverty

Reduction in Indonesia. Paper Prepared for the Roles of Agriculture

International Conference, 20-22 Oct. Agricultural & Development Economic

Division (ESA), FAO, Rome.

Tambunan, T., 2007 (downloaded year). Agricultural and Poverty Reduction in

Indonesia (28 pages). http: [agriculture-poverty_jejaki2.pdf].

Van de Walle, D., 1992. The Distribution of the Benefits from Social Services in

Indonesia, 1978-87. Policy Research Working Papers, Country Economics

Department. The World Bank.

Teshome Temesgen Tilahun**

－ 63－

1. Introduction1.1. Background

Agriculture sector is the backbone of the Ethiopian economy, making multifaceted

contributions to the development of its economy. The performance of agriculture,

however, in terms of feeding the country’s population, which is growing at about 2.9%

per annum, is poor. According to UNDP (2006) report, over 50% of the Ethiopian

population, of whom the majority reside in rural areas, is food insecure in relation to

the medically recommended daily intake of 2,100

kilocalories per person per day (FAO, 1998). Agriculture is responsible for about

50% of Gross Domestic Product, and over 90% of foreign exchange earnings, and

employing over 85% of the labor force.

Nevertheless, Ethiopia is one of the sub-Sahara African countries suffered a lot

from chronic and transitory food insecurity problems. According to UNDP’s report

(2005), there are 5 million people live under chronic food insecurity in nationwide and

2 million people in Amhara region. In addition, 10 and 2.5 million people live under

transitory food insecure condition in the nation and Amhara region respectively.

The Ministry of Agriculture and Rural Development is trying to combat such food

insecurity problems in the national and regional levels. These include identifi cation

of households under chronic and transitory food insecurity problems; and designation

of food security assurance programs like – supply of agricultural inputs to maximize

Food Security Assessment in Ethiopia, Amhara Region*

* This paper has presented to Amhara Regional State Council, Ethiopia (2007), Bahir Dar, Ethiopia.** The author is a lecturer in Ethiopia, Bahir Dar University, Faculty of Agriculture and Environmental Sciences, Department of Disaster Risk Management and Sustainable Development and now a doctoral student at the Graduate School of Economics, Ryukoku University, Kyoto, Japan.

－ 64－

Teshome Temesgen Tilahun

agricultural production, capacity building for income diversification in non-

agricultural activities, participation in productive safety net programs, voluntarily

based resettlement programs, and infrastructural fulfillments to enhance disaster

prevention and resilience capacities.

The study is conducted in the eight districts of West Gojam and one district of

South Gondar Administrative Zone, Amhara region, to ensure whether these people

are vulnerable to food insecurity.

1.2. Objectives of the Study

To examine the depth and extent of food insecurity problems of the nine

districts of food insecurity vulnerable peasant administrations.

To compare the food security situations of the nine districts selected peasant

administrations.

To present the result of food security conditions of the nine districts peasant

administrations to the regional council to form decisions for solutions.

To forward short, medium and long term plans to be implemented under

safety net program.

1.3. Signifi cance of the Study

To ensure whether the question of food shortage, repeatedly raised by the

districts and peasant administrations cabinet members is supported by the study, and

helpful to give urgent response for those who are in critical food shortage in the short

term and incorporating them to safety net programs in the long term. Hence, the

study is also helpful to design short, medium and long-term plans of development in

the study areas.

2. Methodology of The Study2.1. Sources of Data

Both primary and secondary sources of information are used as sources of data.

Primary data obtained through structured questionnaire interviewed to sample

households’ in the twenty food shortage vulnerable peasant administrations of

the nine districts. Development agents and elementary school teachers conducted

households’ interview. In addition, focus group discussion based on sex, age, and

land ownership status has taken as the supplement of the households’ interview. In

addition, secondary data obtained from the districts’ report from 2005-2007.

－ 65－

Food Security Assessment in Ethiopia, Amhara Region

2.2. Sample Selection

The sample peasant administrations are selected based on the offi cial letters and

requests of the district and peasant administration administrators to be included

under safety net program. The sample peasant administrations are selected from the

three Agro-ecological zones (High lands, Plains and Lowlands). In each of the selected

20 peasant administrations, 30 households are selected using systematic random

sampling method from the master list of peasant administrations. The number

of sample peasant administrations selected in each districts is determined by the

particular agro-ecological zones they are experienced. Accordingly, there are three

sample peasant administrations in the two districts (East Estie and Dega Damot) and

two peasant administrations in the rest of the districts.

2.3 Data Analysis Method

The district supervisors and researcher, before data entry have verifi ed the data

obtained from the interview and the districts’ report. Then set to Microsoft Excel

program to be analyzed in the form of frequency and descriptive statistics.

3. Results and Discussion3.1. Household Characteristics

The average number of sample household members’ is 5.68, which is somewhat

larger than the regional average household members (5.2) are. The average lowest

family member is in Gonji Kolela (5.18) and the highest is in Dega Damot (6.15). The

proportion of females’ is 49.33 % and males’ is 50.67 %, and sex ratio is 103 indicating

that the proportion of males is a bit greater than females. When we see the average

sample households’ age distribution, 51.64 % are less than 15 years, 46.69 % are

between 15-64 years, and 1. 67 % are greater than 64 years. This indicates that the

sample households’ younger population is higher than the adult and aged population.

This results in high dependence ratio (1.14). Dependence ratio is higher in East Estie

(174 economically dependent peoples are relied on 100 economically active peoples)

and the lowest is in Yilmana Densa (94 economically inactive peoples are relied on

100 economically active peoples).

－ 66－


Table 1: Sample Households Sex and Age Distribution

No. Districts

Household Members by Sex (%)

Average Family Members

Sample Household Members by Age (%)

Dependence Ratio

Male Female <15 15-64 >641 Yilmana Densa 50.92 49.08 5.40 46.60 51.54 1.86 0.942 Gonji Kolela 48.87 51.13 5.18 47.91 50.80 1.29 0.973 Mecha 51.37 48.63 6.10 55.46 43.17 1.37 1.324 Dembecha 40.03 51.97 5.93 47.19 51.12 1.69 0.965 Quarit 52.12 47.88 5.88 54.39 44.48 1.13 1.256 Dega Damot 48.24 57.76 6.15 52.30 47.15 0.55 1.127 Sekela 51.58 48.42 5.81 49.57 47.85 2.58 1.098 Jabi Tehinan 51.88 48.12 5.33 48.33 51.25 0.42 0.959 East Estie 51.98 48.02 5.60 59.72 36.51 3.77 1.74

Total 50.67 49.33 5.68 51.64 46.69 1.67 1.14Source: Field Survey, 2007

3.2. Landholding and Wealth Status

The average landholding size of the total sample households is 0.99 hectare. The

lowest average landholding size is 0.81 hectare in Mecha district and the highest is

1.31 hectare in Jabi Tehinan. Landless households account 10.67%. Except Mecha

and Dega Damot, all districts have landless households with different proportions.

However, landlessness is severe in Sekela district (25%) than any other districts. This

clearly indicates that landless segments of population have no chance to produce

cereals using their users’ right and hence highly vulnerable to hunger.

Households are classifi ed as rich, medium, poor, and poorest of the poor according

to the local standards. Accordingly, larger proportion of the poorest of the poor is

recorded in Mecha (37.5%), East Estie (35.69%) and in Gonji Kolela (30%). Basic

variables taken for wealth status classifi cation in descending order are farmland size

and quality, number of animal population, and healthy labor; but in East Estie unlike

other districts, the number of animal population is taken as prior measure of wealth

status.

Agricultural production is the main livelihoods of 89.33 % of the total sample

households and the remaining proportions are used other means of income beside

agricultural production. The average oxen holding are 1.09. This indicates that the

average number of oxen is nearly one, showing how farmers have lost their basic

input for their cultivation.

－ 67－


Table 2: Sample Households Landholding and Wealth Status

No. Districts

LandHoldings (%) Average

Land Holdings

Average Oxen Holdings

Wealth Status of Households (%)

Have Land

Have No Land

Rich Medium PoorPoorest of the Poor

1 Yilmana Densa 95.00 5.00 0.82 1.05 12.50 35.00 31.00 21.50

2 Gonji Kolela 95.00 5.00 1.01 1.18 10.00 30.00 30.00 30.00

3 Mecha 100.00 0.00 0.81 1.08 10.00 22.50 30.00 37.504 Dembecha 95.00 5.00 1.15 1.20 12.50 22.50 42.50 22.505 Quarit 91.67 8.33 0.83 0.60 14.00 26.00 37.50 22.50

6 Dega Damot 100.00 0.00 0.91 1.30 21.66 28.33 28.33 21.66

7 Sekela 75.00 25.00 0.99 0.72 20.00 30.00 30.00 20.00

8 Jabi Tehinan 44.44 15.56 1.31 1.50 16.11 28.89 30.56 24.44

9 East Estie 76.67 23.33 0.96 1.00 9.46 18.88 34.98 35.69Total 89.33 10.67 0.99 1.09

Source: Field Survey, 2007

3.3. Production and Productivity

The district report (2005-2007) indicated that the average per capita production

is 3.91 quintal, but it is 1.45 quintal as calculated and shown below for the study

sample households. The highest per capita production is recorded in Dembecha

district (6.12 quintal) on the base of district’s report from 2005 - 2007; but on the

base of this survey, the highest per capita production is found in Jabi Tehinan (2.37

quintal). Except, Jabi Tehinan district, all the remaining eight districts sample

households indicated that their per capita production is less than or equal to two

quintal. Such problem is severe in Sekela (0.08 quintal) and East Estie (0.55 quintal).

In all the districts, the per capita production of the study areas sample households is

much lower than the per capita production indicated in the report (2005- 2007).

－ 68－


Figure 1: Comparison Between Districts and Sample Households Per Capita Production Based on Secondary and Primary Data


Similarly as depicted in table 3, the average production obtained from all districts

sample household respondents is 8.26 quintal. The highest average production among

the study districts sample households is observed in Jabi Tehinan (12.69 quintal)

followed by Yilmana Densa (11.11 quintal). The lowest average production is observed

in East Estie (3.04 quintal), Quarit (5.11 quintal) and Sekela (5.65 quintal).

Table 3: Sample Households Production and Family Members

No Districts Average Production(quintal)

Average Size of Family Members

Average Per Capita Production (quintal)

1 Yilmana Densa 11.11 5.40 2.062 Gonji Kolela 9.77 5.18 1.893 Mecha 7.61 6.10 1.254 Dembecha 8.41 5.93 1.425 Quarit 5.11 5.88 0.876 Dega Damot 10.99 6.15 1.797 Sekela 5.65 5.77 0.988 Jabi Tehinan 12.69 5.36 2.379 East Estie 3.04 5.54 0.55

All Districts 8.26 5.68 1.45Source: Field Survey, 2007

According to the regional Disaster Prevention and Food Security Coordination

Offi ce (2005), a given household member to be regarded as food secured, he / she needs

an annual expenditure of greater than or equal to 769.5 birr (Ethiopian currency).

Of which, 537.00 birr for food, 74.88 birr for clothing, 53.00 birr for education and

communication, 68.00 birr for medication, 8.50 birr for tax, and 28.12 birr for other

－ 69－


non-food expenditures.

This study indicates that except Gonji Kolela and Jabi Tehinan districts, all

have shown that the birr value of per capita production is much lower than even to

the minimum food expenditure alone (537.00 birr). This entails that there is food

insecurity problems in all districts with different degree.

Figure 2: Households’ Annual Regional Minimum Expenditure Standard and Sample Households Per Capita Income in Birr


Figure 3: Land Productivity ( Quintal Per Hectare)


－ 70－


In the above graph, it is shown that in all of the districts sample households,

productivity is less than the national average (13.39 quintal per hectare) and regional

average productivity (12.01 quintal per hectare), except Dega Damot (13.28 quintal

per hectare), which has greater productivity than the regional level but lower than

the national level. Even the average of all the sample household districts productivity

(6.88 quintal per hectare) is less than the regional average productivity (12.01 quintal

per hectare). Such low productivity is especially depicted in East Estie (3.11 quintal

per hectare) and Quarit (5.88 quintal per hectare).

3.4. Households Food Gap Condition

Of all districts, only 12% sample households have covered their annual food

demand by their own production. The remaining 88% are unable to cover their annual

food consumption by their own production. Especially in Quarit district, all sample

households are found unable to cover their annual food consumption by their own

production. In all districts, there are very small proportion of the sample households

who can cover their annual food consumption with their own production in Sekela

(3.39%, East Estie (4.55%), and Mecha (5%).

Table 4: Sample Households Who Can and Cannot Cover Their Annual Food Consumption (%)

No. Districts Cover Annual Food Consumption

Cannot Cover Annual Food Consumption

1 Yilmana Densa 18.60 81.402 Gonji Kolela 30.00 70.003 Mecha 5.00 95.004 Dembecha 16.70 83.305 Quarit 0.00 100.006 Dega Damot 13.60 86.407 Sekela 3.39 96.608 Jabi Tehinan 17.00 83.009 East Estie 4.55 95.50

All Districts 12.00 88.00 Source: Field Survey, 2007

Furthermore, as shown in table 5 in those districts that are highly exposed to food

shortage in the preceding tables and graphs, have also shown similar characters in

terms of their food gap in different classifi cations of months. In these districts, namely,

Quarit, East Estie, Sekela and Mecha, have 5-20% of the population who could cover

their food consumption only from 1-3 months and conversely the proportion of their

population who could cover food consumption by their own production from 10-12

－ 71－


months is smaller than the rest of the districts. However, it does not mean that the

rest of the districts sample households are in a better situation to cover their annual

food consumption. Still there are large segments of population who could not cover

their annual food consumption as shown below.

Relatively speaking, Jabi Tehinan and Dega Damot districts sample households

are better than others in covering their annual food consumption by their own

production. In the nine districts, the percentage of sample households who could cover

their annual food consumption by their own production is only 29.6 %. This indicates

that larger proportions (more than 70 %) of the sample households are unable to cover

their annual food consumption by their own production.

Table 5: Sample Households Food Consumption Coverage by Their Own Production (%)No. Districts 1-3 Months 4-6 Months 7-9 Months 10-12 Months1 Yilmana Densa 0.00 18.30 50.00 31.702 Gonji Kolela 1.70 3.30 33.30 61.703 Mecha 5.00 36.70 41.70 16.704 Dembecha 3.30 20.00 48.30 28.305 Quarit 20.00 33.30 35.00 11.706 Dega Damot 0.00 5.00 50.00 45.007 Sekela 10.00 25.00 46.70 16.708 Jabi Tehinan 2.20 10.00 35.60 52.209 East Estie 16.00 53.30 25.60 3.30

All Districts 6.70 23.80 39.90 29.60Source: Field Survey, 2007

3.5. Contribution of Extension Package

It is shown that households under extension package earn better per capita

production (1.80 quintal or 407.27 in birr) than who are not under extension package

(1.40 quintal or 293.35 in birr). In terms of food consumption coverage, those under

extension package on the average could cover 8.6 months, where as those who are not

could cover only 7.6 months. However, with regard to the average number of family

size, extension users (6.4) have more family size than the non-extension users (5.3).

－ 72－


Figure 4: Extension Package Users and Non-users Family Members, Per Capita Production, and Number of Food Self-Suffi ciency Months


3.6. Causes of Food Shortage

Low and erratic rainfall, , high population pressure, serious land degradation, ,

insect pests, , fall of ice before harvest; and less participation and practice of extension

packages in descending rank are identifi ed as the major causes for poor production

and productivity which eventually led to food deficit. These causes are identified

mainly by focus group discussants in each of the sample peasant administrations.

3.7. Food Shortage Indicators

Huge out flow of population/ out migration, hunger and misery, reduction and

disappearance of water sources, illiteracy and high level of school dropout, , confl ict on

resources, and incapability to purchase modern agricultural inputs are the common

food shortages indicators in the districts peasant administrations..

3.8. Food Shortage Coping Strategies

When people faced food shortage, they used different coping strategies to skip

from such situation and transit to a better tomorrow. Among the various methods of

coping strategies temporary migration, reduction of food quantity, skip-eating times,

selling domestic animals, credit from private lenders, and child labor are the common

coping strategies practiced by the local peoples to withstand food shortage.

－ 73－


3.9. Strength, Weakness, Opportunities and Threats (SWOT) Analysis

A. Strength

Availability of huge economically active labor force; commitment of the society

to relieve from such better life; commitment of the regional government to solve

such critical problems; and acceptance of the society to the newly started extension

packages are among the strengths of the sample households’ that are helpful to

combat the present bitter situation and bring better tomorrow.

B. Weakness

Due to the remoteness of the studied peasant administrations from the center

of the district capital, development agents and district officers, even peasant

administrators did not go there and give professional advices and administration

to the local society. In addition, the presence of weak family planning service

mobilization and the attention given to these districts by the regional government is

too low on account that these areas are wet areas expected for surplus production.

Unavailability of agricultural experts in the districts and peasant administration

levels with poor credit access/facility are some of the major weaknesses aggravated

the existing food shortage problems in the sample districts sample households.

Furthermore, in some districts (Dega Damot and Dembecha) they have potential idle

communal land, but still there are landless peasants.

C. Opportunities

Comfortable climate for crop production and animal husbandry; presence of

economically active labor force; ambition to accept and adapt new technologies and

new systems of production; availability of potential land are the major opportunities

in the sample districts.

D. Threats

If the torrential ice mixed and erratic rainfall, usually happened in autumn

season, continuous in the future, resilience would be very difficult. Furthermore,

confl icts between landless and land users due to land resource misallocation may lead

to big socia

4. Conclusion

There is serious food shortage in all of the nine districts with different degree.

In all districts production, productivity, per capita production and other food related

parameters are very low as compared to the regional and national standards. There

are smaller proportions of the sample population that could cover their annual food

－ 74－


consumption. With this respect, especial attention and priority is important for

East Estie, Quarit, Sekela and Mecha district vulnerable peasant administrations

without which loss of life due to hunger would be immense as it has already started.

Thus, particularly in East Eastie and Sekela districts emergency food aid would

be an indispensible action. In fact, the districts’ reports in all districts showed that

there is better food production. Hence, these food shortage vulnerable districts are

superimposed by the surplus producers of other peasant administrations within each

districts. Thus, it is difficult to see the clear picture of these districts food security

problem as it is hiding by those surplus producers.

There are large numbers of landless peasants (25% in East Estie and 30% in

Jabi Tehinan). Natural disasters like frequent drought; limited extension packages

participation; limited use of agricultural inputs and credit accesses have all

contributed their own behalf to aggravate the problems of food insecurity and made

the society more vulnerable.

5. Recommendations

Short Term

Redistribution of surplus potential lands for those landless peoples.

Mobilize employment generating schemes like natural resources protection,

infrastructural construction under safety net program for those who are

able to work, and offering aid for those who cannot work to save their life for

a better tomorrow by fi lling their food gap.

Strengthen the commenced extension packages (minimum and special

packages).

Provide professional support to farmers on water and soil conservation

methods.

Arrange credit service facilities; and especial attention should be given

for those who do not have guarantee to lend money from private and

governmental lenders, so that they can participate in agricultural and non-

agricultural activities.

Emergency food aid is required for children, poor health and aged peoples in

East Eastie and Sekela.

Mobilize the young to participate in forest development on communal

mountainous lands.

In East Eastie, land is totally degraded and hence diffi cult to rehabilitate

－ 75－


easily within short time such that resettlement program shall be arranged.

Medium and Long Term

In the medium and long term: implementation of family planning service; supply

of agricultural inputs with appropriate price and variety; taking detail studies on

irrigation schemes on water potential areas; implementation of diversifi ed livelihood

approach are recommended to the study areas.

References

Amhara National Regional State ((1998) Food Security Evaluation in Amhara Region,

Bahir Dar, Ethiopia.

Amhara National Regional State Districts’ Report (2005-2007) Districts’ Agriculture

and Rural Development Yearly Report, Bahir Dar, Ethiopia.

Amhara National Regional State (2005) Food Security Assessment in Amhara Region,

Bahir Dar、Ethiopia.

Food and Agricultural Organization (FAO) (1998) Crop and Food Supply Assessment

Mission to Ethiopia. FAO Global Information and Early Warning System on

Food and Agriculture, Rome, Italy.

IMF (2005) Poverty Reduction Strategy Paper Joint Staff Assessment in Ethiopia,

Addis Ababa, Ethiopia.

UNDP (2005) Food Security Report in Ethiopia, Addis Ababa, Ethiopia.

UNDP (2006) The Patterns of Food Intake and Households’ Expenditure in Rural

Ethiopia, Addis Ababa, Ethiopia.

Busige Nishantha

－ 77－

1. Introduction

Small and Medium Enterprises (SMEs) play a crucial role in contributing

to overall industrial production, employment generation and poverty reduction

in developing countries (Arinaitwe, 2006). This paper attempts to discuss the

contribution of SMEs to economic development in post- war Sri Lanka and the

possibilities for promoting the SME sector. At the same time, the study attempts to

explore the prevailing challenges that have limited the growth of the SME sector and

fi nally, try to come up with some policy recommendations. During past three decades,

the Northern and Eastern Provinces of Sri Lanka were cut off from the development

process by the continuous civil war.

The war was costly to the nation, as it was financed through increased taxes

and interest rates, leading to a diversion of developmental resources away from

economic sectors, private sector inclusive. Subsequently, the war diverted funds and

attention from building the infrastructure which industries rely on; such as transport,

electricity, water and telecommunication. In the afterthought of the three –decade

civil war, the Sri Lankan government has given more priority to rebuilding Sri Lanka

in order to achieve a higher economic growth. More specifically, the government

targets to achieve a balanced development in all parts of the country including

Northern and eastern Provinces. The government is currently implementing massive

infrastructure development programs side by side with the resettlement of Internally

Displaced People (IDPs). The opportunities for the private sector in post confl ict Sri

A Study of Small and Medium Enterprises in Sri Lanka

* Busige Nishantha is a Faculty Member at the Department of Management & Organization Studies of the University of Colombo, Sri Lanka and a doctoral student at the Graduate School of Economics, Ryukoku University, Kyoto, Japan [[email protected]].

－ 78－

Busige Nishantha

Lanka will range from the opening of the vast areas of fertile land, accessibility to

two thirds of Sri Lanka’s coastal line, and ocean resources, including some of the best

natural beaches (eg. Nilaveli, Pasikuda) and tourism potential in the world. SMEs

offer the best prospects for putting people back to work, generating incomes and

contributing to the rebuilding of society.

According to the Central Bank of Sri Lanka (1998), the cottage and Small Scale

industries sector plays an important role in economic development through creation of

employment opportunities, the mobilization of domestic savings, poverty alleviation,

income distribution, regional development, training of workers and entrepreneurs,

creating an economic environment in which large firms flourish and contributing

to export earnings on one hand. On the other hand, SMEs do not exist in isolation

from the rest of the economy, since they are integral of the supply chains; with large

enterprises, as suppliers, customers, or complementary producers.

1.2. Methodology

The current situations of the SMEs are analyzed by using data of latest industrial

surveys of Sri Lanka. The Department of Census and Statistics conducted industrial

surveys in 2007. In addition to this, various other data sources such as Central bank

of Sri Lanka, Ministry of rehabilitation Reconstruction & Refugees are used.

2. Sri Lanka in The Beginning of Post War Period at Glance

Sri Lanka is a tiny Island with a total land area of 65,610 square kilometers

(See fi gure 1) and a multi-racial country which has total population of 20.2 million.

According to the Asian Development Bank (2008), Sri Lanka is becoming a middle-

income country and on track to achieve the Millennium Development Goal (MDG) on

poverty reduction. The country is also on track to achieving most other MDGs, as its

social indicators are high compared with those of countries of similar income status.

However, the civil strife that prevented Sri Lanka from exploiting its full potential

and benefiting from its proximity to India, just as Hong Kong profits from being a

trade hub to China. The current Sri Lankan government broad economic strategy is

outlined as “Mahinda Chinthanaya” ( Mahinda’s thought) , which guides government

economic policy; is focused on poverty alleviation and steering investment to

disadvantaged areas. Developing the SMEs; promoting the agricultural sector and

expanding the already enormous civil service are sum of the steps being taken. As

shown in the table 2, though most of the social indicators of Sri Lanka prevail in

－ 79－


satisfactory level, economic indicators are still in lower positions. Both export and

remittance have declined in recent times due to global economic crisis. The rising

oil prices and the thirty years conflict have contributed to Sri Lanka’s high public

debt load (86% of GDP in 2007). Sri Lanka needs economic growth of 7% - 8% and

investment levels of about 30 % of GDP for a sustainable reduction in unemployment

and poverty. In the past 10 years, investment levels have averaged around 25% of

GDP. The future of Sri Lanka’s economy primarily depends on its political stability;

return to permanent peace, and continual policy reforms, particularly fi scal discipline

and budget management.

Table 1: General Socio-economic Indicators of Sri Lanka Figure 1: Map of Sri Lanka Indicator Value

Mid-year Population(‘000) in 2008Population growth ratePer capita GDPGDP GrowthInfl ation ratePercentage of poor households (2006/2007)National savings (percent of GDP)Literacy rate (average / 2006)Human Development Index (2006)Unemployment rate(percent of labor force)Total external debt and liabilities (Percent of GDP)

20,2161.02014 (US$)6.022.615.2

18.290.80.742

5.2

51.0

Source : www.mapsofworld.com Source: Central Bank of Sri Lanka (2008)

2.1. Industrial Potentials in confl ict-affected Areas

Northern and Eastern Provinces were the most conflict affected areas and

comprise an area of 18,640 square kilo-metres (28 percent) of the total area of Sri

Lanka. The Eastern Province (EP) comprises 15% of the land area of the country, 25%

of the coastal belt, 8% of the population and 35% of the fi sheries population. The total

land area is 9,361 sq km, inland waters 635 sq km with a total of 9,996 sq km or 15%

of Sri Lanka. EP consist with three districts; Ampara, Batticaloa, and Trincomalee.

This province contributes 4.8 percent to Gross Domestic Products (2008). In the past

Eastern Province produced large quantities of marketable surpluses of paddy, and the

eastern rice producing area was recognized as the granary of the country.

－ 80－

Busige Nishantha

Table 2: Potential Industries for Northern Province of Sri Lanka

Resource Potential IndustryLimestone Cement and limekilnLivestock Processed milk,yoghurt,ice cream,dairy & poultry farm,bio

gas, and manufacture of compost manureMarine resources Fish,dry fish,manufacture of fishing gear,ice plants,boat

building, and processing of lobsters for exports.Palmyrah Bott l ing o f toddy & sweet toddy,Jaggery & pa lm

suger,distilling arrack,odiel fl our,fi ber and fi ber products, mat

weaving, and palmyrah leaves productsFruits and vegetables Fruit processing,jams,cordials,savouries,pickles,dehydrated

fruits & vegitablesCoconut Coconut oil,soap,animal fodder, charcoal,fi bre & coir productsPaddy & rice Rice milling ,rice fl ourChillies Sauces & powdertobacco Cigars and cigarettesclay PotterySource: Ministry of rehabilitation Reconstruction & Refugees, Jaffna Plan 2003

There is a potential for lucrative agri-businesses. In addition, EP consists with

number of natural resources from fi sheries to minerals. It also consists with multiple

ports including famous natural port called “Trincomalee harbor” and some of the best

beaches in the country. According to (Sarvananthan, 2007) EP could become industrial

economy and tourist center in the long run.

Northern Province (NP) consist of 4 districts: Jaffna, Kilinochchi , Mullaitivu ,

mannar and Vavuniya. Crop agriculture (red onion, chilli, potato and tobacco), livestock

farms (meat, milk and egg production), and fi sheries are the major economic activities in

the NP. Table 3 shows the potential industries suited for Northern Province, especially for

Jaffna district based on the resources endowments and comparative advantages.

3. Review of Overall Performance in Small and Medium Enterprise Sector

SMEs are defi ned in a variety of ways by various countries using such parameters

such as number of persons employed, amount of capital invested, amount of turnover

or nature of the business, etc. not only different countries apply different defi nitions on

the concept of SMEs, even within countries, different regions and different institutions

adopt varying defi nitions in this regard. In Sri Lanka , there is no clear defi nition for

SMEs. Different government agencies and other organizations use different criteria

－ 81－


to identify SMEs. Among these criteria are the number of employees, the size of fi xed

investment, energy consumption, and the nature of the business and the sector,( i.e.

formal or informal), in which the industry operates. As shown in table 1 most of the

organizations have defi ned small enterprises with reference to the number of employees

and amount of fi xed capital. According to their defi nitions, the ceiling on employment

and fi xed capital used are respectively 50 employees and Rs 20 million excluding land

building and permanent working capital. SMEs encompass establishments operating in

agriculture, mining, manufacturing, constructions and service sectors. They have been

identifi ed to play a crucial role in the economic development process by developed as

well as developing countries. They are even more important to developing countries as

the poverty and unemployment are crucial problems in these economies.

Table 3: Different Defi nitions of Small Enterprise used in Sri LankaInstitution Defi nitionIndustrial Development

Board (IDB)

(a) Fixed assets excluding land , building and permanent

working capital not exceeding Rs.4 million.

(b)Number of employees less than 50The Department of Small

Industries (DSI)

(a)Capital investment less than Rs.5 million

(b)Number of employees less than 50

Export Development Board

(EDB)

(a) Capital investment less than Rs. 20 million in

plant machinery and equipment excluding land

and buildings and an annual export turnover not

exceeding Rs. 40 million and total annual turnover

not exceeding Rs. 100 million.The National Development

Bank (NDB)

(a) Capital investment less than Rs. 20 million excluding

land and buildings.Source : Author

According to the industrial census conducted by the Department of Census and

Statistics in 1983, there were a total of 102,721 formal registered and unregistered

informal industrial units in the country producing various types of products

and employing 639256 persons. The survey findings indicated that industrial

establishments below 5 employees accounted for 84% of the total establishments

and 28% of total employment, but accounted for only 7.5% of the total output and

7.0% of the value added in the industrial sector. Enterprises having over 5 employees

represented less than 15.7% of all establishments, but accounted for 92.5% of the

output and 71.6% of total employment (Central Bank of Sri Lanka, 1998).

All the existing data sources lack accuracy and complete coverage of the

－ 82－

Busige Nishantha

‘enterprise sector’ in spite of various government and semi government institutions

engaged in compiling SME related data bases. The Department of Census and

Statistics has been conducting annual industrial surveys, it has not covered the

establishments with less than 5 persons engaged, due to the fi nancial limitations and

non availability of a proper frame. The most recently conducted industrial survey

dates back to 2007.

Table 4: Overview of Sri Lankan Manufacturing Sector Classifi ed by Industrial Size in 2006Industrial Size Industrial

EstablishmentsIndustrial Employment

T o t a l Va l u e -Added

Total Output

Micro EnterprisesSmall EnterprisesMedium Enterprises

No. % No. % Million Rs

% Million Rs

%

Total SMEsLarge EnterprisesTotal

59248589348918002291820920

28.3241.0616.6786.0513.95100

416391596022221734234149650771388491

3.0011.5016.0030.5069.50100

9382719861590192403878578161098203

0.856.5614.4821.8978.11100

2032614198542991659222719030752495302

0.815.6917.2323.7376.27100

Source: Author’s calculation based on Industrial Census 2007, Sri Lanka

The data provided by this survey provides a good frame for analyzing the

contribution of SMEs to the national economy in Sri Lanka in terms of employment

generation, value of output and value addition. For the purpose of present analysis,

we categorized very small or micro enterprises were those enterprises employing

between 5-10 people, small 10-39 people, medium 40-99 people and large 100 or more.

As shown in table 2, in 2006, micro enterprises accounted for 28 percent of the total

number of enterprises but contributed to only 3 percent of total employment in the

manufacturing sector, about 1 percent of total value added and 1 percent of total

output. Small enterprises which had a work force of 10-39 employees accounted for 41

percent of total number of establishments in the manufacturing sector. Small fi rms

accounted for 11 percent of industrial employment, 6.5 percent of total value-added

and 5.6 percent total output. Medium sized firms which had a workforce of 40-99

employees accounted for 16 percent of the total number of industrial establishments

accounted for 16 percent of total employment, 14 percent of total value-added and

17 percent of total output. It reveals that medium sized establishments are much

better than micro and small enterprises in terms of employments generation and

value addition. All the industrial establishments, which have employed less than

100 employees, can be categorized as small and medium enterprises (SMEs). They

－ 83－


accounted for 86 percent of total number of industrial establishments but only 30

percent of total employment, 21.8 percent of total value-added and 23.7 percent of

total industrial output. As for large fi rms which employed more than 100 employees,

while accounting for 13.9 percent of total number of establishments, they contributed

to 69.5 percent of total employment, 78 percent of total value-added and 76.2 percent

total output. It revealed that SMEs are providing more employment opportunities but

their contribution for output is relatively low.

3.1. Types of Industries, Factor Proportion and Factor productivity of SMEs

with Comparison to Large Businesses

Table 3 shows the results of the calculation of capital-labour ratio, labour productivity

and capital productivity by industries. Firstly, results found that capital intensity is

exceptionally low in nearly all industries under SMEs, except for paper products and basic

metal industry. Such low capital- labour ratio in small and medium enterprises shows that

most tend to use higher proportion of labour relative to capital inputs. Considering Sri

Lanka as country which lacks capital but has abundant labour resources, the high intensity

of labour usage relative to capital implies a relatively more effi cient usage of scarce resources

in the country. It also implies that Sri Lankan SMEs tend to utilize more labour for a

given amount of capital relative to large enterprises. It also implies that SMEs potential in

contributing to employment generation in industries as long as they have an equal access to

capital. Another signifi cant result is that, small fi rms (10-39 employees) have relatively high

capital – labour ratio than micro and medium sized firms. Secondly, labour productivity

was compared with the different size of fi rms. Labour productivity of micro enterprises are

relatively low compare with the small medium and large enterprises. Small enterprises

which are producing wood and wood products are achieving higher labour productivity than

other sizes of fi rms. In some industries such as non metallic mineral products, and basic

metals , medium size enterprises are achieving higher labour productivity than other sizes

of fi rms. In average, labour productivity of large enterprises is greater than SMEs. Overall,

medium size fi rms achieving better labor productivities than small and micro fi rms. Thirdly,

we compared the capital productivity of different size of fi rms by different industries. There

is no clear pattern. In some industries such as textile, apparel, leather, non metallic mineral

products, metal products and machines and equipments, micro enterprises getting grater

capital productivity than small , medium and large fi rms. Medium size fi rms are reaching

higher capital productivity in food, beverage, tobacco, chemical, petroleum, rubber and

plastic industries. When comparing the all industries, relatively higher capital productivity

is achieving by medium size enterprises than micro, small and large enterprises.

－ 84－

Busige Nishantha

Tab

le 5

: Fa

ctor

Pro

por

tion

an

d F

act

or p

rod

uct

ivit

y of

Dif

fere

nt

Siz

e of

In

du

stri

esF

act

or P

rop

orti

on a

nd

Fa

ctor

pro

du

ctiv

ity

of D

iffe

ren

t S

ize

of I

nd

ust

ries

Typ

e of

In

du

stry

Typ

e of

In

du

stry

Cap

ital

-lab

or R

atio

Cap

ital

-lab

or R

atio

Lab

or P

rod

uct

ivit

yL

abor

Pro

du

ctiv

ity2

Cap

ital

Pro

du

ctiv

ity

Cap

ital

Pro

du

ctiv

ity2

Mic

roM

icro

Sm

all

Sm

all

Med

ium

Med

ium

Lar

geL

arge

Mic

roM

icro

Sm

all

Sm

all

Med

ium

Med

ium

larg

ela

rge

Mic

roM

icro

Sm

all

Sm

all

Med

ium

Med

ium

Lar

geL

arge

Foo

d, B

ever

age

& T

obac

coT

exti

le, A

ppar

el &

Lea

ther

Woo

d, &

woo

d pr

odu

cts

Pap

er p

rodu

cts,

pri

nti

ng

& p

ubl

ish

ing

Ch

emic

als,

Pet

role

um

, ru

bber

& p

last

icN

on –

met

alli

c M

iner

al p

rodu

cts

Bas

ic M

etal

Met

al P

rodu

cts,

Mac

hin

es &

Equ

ipm

ents

Oth

er M

anu

fact

uri

ng

All

In

dust

ry

81.0

3.19

5.32

96.2

912

.90

1.95 -

0.75

0.52

22.0

8

95.6

625

.60

10.2

478

.01

32.0

761

.35

-7.

4914

.71

46.7

0

17.4

611

.78

24.6

9

134.

91

46.4

8

17.5

894

5.17

29.9

586

.04

40.5

2

58.1

941

.55

56.5

6

88.1

6

136.

04

74.0

353

.81

23.1

82.

9855

.69

436.

9386

.16

139.

75

384.

23

243.

63

270.

6336

5.19

132.

0423

7.49

225.

32

1076

.18

108.

1643

2.69

197.

48

453.

77

222.

7914

3.59

254.

3616

4.65

451.

04

979.

3925

6.63

293.

72

337.

44

2100

.53

558.

9518

71.7

0

164.

8513

1.80

715.

75

1091

.77

591.

2425

2.91

1146

.75

2214

.02

465.

5716

33.9

3

268.

7113

64.6

388

8.86

5.39

27.0

326

.25

3.99

18.8

9

138.

75 -

175.

4145

3.87

10.2

0

11.2

54.

2242

.24

2.53

14.1

5

3.63 -

33.9

411

.19

9.66

56.0

921

.79

11.9

0

2.50

45.1

9

31.8

01.

98

5.50

1.53

17.6

6

18.7

614

.23

4.47

13.0

1

16.2

7

6.29

30.3

7

11.5

945

8.62

15.9

6

Sou

rce:

Au

thor

’ s c

alcu

lati

on b

ased

on

In

dust

rial

Cen

sus

2007

, Sri

Lan

ka

2)

Th

e tw

o in

dexe

s of

pro

duct

ivit

y u

sed

in t

his

stu

dy a

re l

abou

r an

d ca

pita

l pr

odu

ctiv

ity

(Ado

pted

fro

m D

ias,

Sri

yan

i, F

acto

rs A

ffec

tin

g th

e P

rod

uct

ivit

y of

Man

ufa

ctu

rin

g S

ecto

r

in S

ri L

anka

: A S

pati

al A

nal

ysis

, Geo

Jou

rnal

, 199

1,23

(2),

113-

120.

Pro

duct

ivit

y of

Lab

our

(PL

) =

V

alu

e A

dded

P

rodu

ctiv

ity

of C

apit

al (

Pc)

=

Val

ue

Add

ed

N

um

ber

of E

mpl

oyee

s G

ross

add

itio

n t

o fi

xed

asse

ts.

－ 85－


3.2. Geographical Concentration of Manufacturing Industries

Table 6 shows the geographical distribution of industries in Sri Lanka. Small

scale enterprises are concentrated in the Western province based districts of

Colombo (13%) and Gampaha (15%) and North-Western Province based district of

Kurunagala (14%). Medium and large scale industries are concentrated mainly in

Western Province based districts of Colombo (28%) and Gampaha (24%). In the case

of employment generation in small scale industries Gampaha (16%), Colombo (15%)

and Kurunagala (14%) are the main districts.

Table 6: Geographical Concentration of Industries Geographical Concentration of Industries

DistrictDistrict

Establishments less than 25Establishments less than 25 employees employees

Establishments more than 25 Establishments more than 25 employeesemployees

No. ofNo. of Establishments Establishments Persons engagedPersons engaged No. ofNo. of

Establishments Establishments Persons engagedPersons engaged

Colombo 1,633 20,195 2,413 365,388Gampaha 1,900 20,914 2,023 370,100Kalutara 649 6,574 619 70,174Kandy 1,114 12,581 517 62,291Matale 267 2,878 104 16,901Nuwara-Eliya 151 1,450 210 32,510Galle 679 6,406 356 48,566Matra 429 4,041 200 17,982Hanbantota 230 3,139 62 12,669Mannar 9 51 1 60Vavuniya 44 425 18 702Mullaitivu 77 462 3 87Batticaloa 307 3491 - -Ampara 401 3,370 79 12,287Trincomalee 18 149 39 1,053Kurunegala 1,716 18,236 557 46,553Puttalam 1,317 14,669 287 28,442Anuradhapura 343 3,731 60 9,479Polonnaruwa 195 2,461 77 5,479Badulla 171 1471 239 19,800Monaragala 116 1340 22 7,038Ratnapura 209 2197 456 103,392Kegalle 392 4505 211 22,803Total 12,368 134,735 8,551 1,253,756

Source: Author’s calculation based on Industrial Census 2007, Sri Lanka

Medium and large enterprises are also mainly generating employment in the

Western Province based districts of Gampaha (30%) and Colombo (29%). This clearly

shows the heavy concentration of SMEs in Western Province of Sri Lanka. The shaded

areas of the table 6 shows the data related to some conflict affected districts. Few

numbers of establishments (7%) are only operating in these six districts. they have

generated only 4 percent of employments in the manufacturing sector.

－ 86－

Busige Nishantha

4. Oppetunities Associated with the Development of the SME Sector in Sri Lanka

In post war period, Sri Lanka has to rethink about its future prospects. There

are multi-faceted opportunities prevailing in the SME sector. Firstly, development

of SME sector can be used to promote balanced regional development. Due to the

war situation, in the past few decades, major commercial activities were more

scattered in urban areas, especially the western province of the country. With regard

to the overall industries by the end of the year 2006, 80 Percent of the registered

industries were located in Colombo district and Gampaha district (next to Colombo

district). According to the World Bank (2009), with the gradual resettlement of the

displaced people and restoration of their livelihoods, agriculture and SME production

is expected to pick up. At the same time, regional demand will be created for SME

products. Secondly, with further improvement in the overall investment climate,

foreign direct investment is expected to continue flowing in to the country. More

investment opportunities are emerging in following areas; precious and semi-precious

stone mining, fi sheries, organic agriculture in large scale, wind and solar energy, oil

and gas exploration, Eco-tourism ect . Then SMEs can play a complimentary role to

large industries through subcontracting, thus facilitating the linkage between the

formal and the informal sector. Thirdly, there is a high possibility to creating a strong

backward linkage between SMEs and agricultural sector. Many inputs in to the

SME production are based on agricultural and forestry products (Arsyad, 2009). As

a result of such linkages SME manufactures will be much less import intensive than

large businesses. The North and east parts of the country have more agricultural

land. Before the civil war the region’s agricultural production compared favorably

with that of other parts of the country, mainly rice, vegetables, fruit, and other cash

crops. SMEs can add value for those primary products and market to the other

parts of the country and export markets. Fourthly, there are large deposits of silica

sand and normal construction sand available in Northern Province which can be

used in manufacturing of glass products. Fifthly, The SMEs can be started with low

investments, mainly from personal savings or informal borrowings. Therefore, the

sector contributes to broad –based capital formation throughout the economy. Sixth,

as discussed in earlier section, SMEs especially medium sized firms absorb more

labour per unit of capital employed implying that; by promoting this sector large huge

employment opportunities can be created in the informal sector.

－ 87－


5. Constraints Associated with Development of SMEs

Development of the SME sector in Sri Lanka is constrained by number of factors.

According to the white paper (2002) prepared by Task Force for Small and Medium

Enterprise Sector Development Programme, has identifi ed the major constraints that

critical for the SME development in Sri Lanka. In addition to that, multilateral and

bilateral agencies such as USAID, world bank,JICA,ADB,UNIDO have carried out

number of studies on problems of SMEs in Sri Lanka.

The lack of a comprehensive framework in terms of policies toward SMEs

development is one of the most important factors that constraint the growth and

development of SMEs. There is no national policy for industrial development of the

country and the policies are changing with government changes.

Access to suffi cient fi nance is also a major problem faced by SMEs due to lack of

access to bank facilities, lack of regional spread of loans, lack of knowledge of bank

facilities, lack of knowledge of bank procedures, and inability to provide collateral.

Lending institutions are expecting land based collateral but most of the SME owners

do not their own lands.

The use of low level of technology and absence of technical and managerial skills

has also been identifi ed as important constraints affecting the development of SME.

With low level of technology it is diffi cult to maintain higher productivity and quality,

resulting in higher costs of production and a reduction in market competitiveness.

The lack of adequate infrastructure facilities also hampers the progress of

this sector. The prosperity of enterprises is dependent on the availability of key

infrastructure services such as electricity, water, telephones and road access.

6. Conclusion and Policy Recommendation

The purpose of this article was to examine the current situation of the SME

sector in Sri Lanka after thirty decades civil war, and explore the opportunities and

challenges prevail for developing a healthy SME sector. Available secondary data and

extensive literature indicates that 86 percent of the industrial enterprises belonged

to the SME category and they play a vital role in the economy and are a major source

of various economic contributions. The study revealed that medium sized firms

(employees between 40 -99) have been gaining relatively higher productivity and

their contribution for value addition, total output and employment generation is also

better than micro and small fi rms. There is a huge potential for this sector to prosper

－ 88－

Busige Nishantha

in war affected areas given the high level of human capital and natural resource

endowments.

Having identified some of the challenges and opportunities associated with

SMEs it is possible to present some strategies that the government and the agencies

responsible for development of the SMEs in Sri Lanka.

First, the government has to take measures to formulate national policy for

SMEs as an integral part of the overall industrialization policy. Without such policy

frame work, it is difficult to develop this sector. Given the, non -diversification of

the industrial structure and its heavy concentration in the few low value added

industry categories is a main problem for sustainability of the industrial development

(Dasanayaka,2009) process. There need to be gradual shift towards high value

added domestic resource based production activities. Second, innovative measures

should be used to attract investment and business interest from the displaced Jaffna

Diaspora. Most of intellectuals and entrepreneurs have migrated from Sri Lanka to

western countries due to the civil war. Diaspora investors have the potential to play

an important role. Even more than most international operators, since they have

the local connections and, the personal motivation to contribute to their country’s

reconstruction. While living abroad, they may have picked up valuable expertise,

in addition to amassing funds ( Bray,2007). As war is over, the government should

provide various incentives and security to them to come again to their motherland

and convert the accumulated financial and human capital in to assets of the

development process. Third, as lack of fi nance constrains the growth and development

of SMEs, the government and other supportive agencies need to promote micro

lending and SME lending on a much bigger scale, with greater participation of women

entrepreneurs on the line of the “ Grameen” scheme of Bangladesh. Forth, beyond

enhancing the coverage and quality of basic infrastructure, initiatives would also help

improve access to markets for rural fi rms.

－ 89－


7. References

Arinaitwe,S.K. 2006. Factors Constraining the Growth and Survival of Small Scale

Businesses. A Developing Countries Analysis. Journal of American Academy

of Business, Cambridge, 8(2), 167-179.

Asian Development Bank, .2008. Country Partnership Strategy, Manila, Asian

Development Bank.

Bray,J.2007. The Role of Private Sector Development in Post-conflict Economic

Recovery, United Nation Development Progremme, Sep, 1-38.

Central Bank of Sri Lanka .1998. Economic Progress of Independent Sri Lanka,

Colombo, 121- 124.

Central Bank of Sri Lanka. 2008. Annual Report, Colombo , Sri Lanka.

Central Bank of Sri Lanka.2008. Economic and Social Statistics of Sri Lanka, Central

Bank of Sri Lanka ,Colombo.

Dasanayaka,S.2009. Small and Medium Scale Enterprises in Informal Sector in

Pakistan and Sri Lanka with Research Agenda, IARIW-SAIM Conference,

Kathmandu, Nepal.

Department of Census and Staistics .2007. Annual Survey of Industries-2007,

Colombo.

Department of National Planning .2006. Mahinda Chintana : Vision for a New Sri

Lanka, Colombo.

Dias,Sriyani.1991.Factors Affecting the Productivity of Manufacturing Sector in Sri

Lanka: A Spatial Analysis,GeoJournal,23(2),113-120.

Narman, A. & Vidanapathirana, U.2005. Transiting from Prolonged Confl ict to Post

Confl ict Developmeny: Locating the Case of Trincomalee District of Sri Lanka,

Pease and Democracy in South Asia,1(1), 13-22.

Task Force for SME Sector Development Program.2002. White Paper: National

Strategy for Small and Medium Enterprise Sector Development in Sri Lanka,

Ministry of Enterprise Development, Industrial Policy and Investment

Promotion, Colombo.

DISCUSSIONParticipatory Research for Poverty and Conflict Resolution

DISCUSSION

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－ 93－

Moderator, Prof. Yoshio Kawamura, Ryukoku University: Ok, so right now I

have a headache, because I don’t know how to run this discussion that really depends

on your participation. As the lady said, the key issue is the participation, to solve any

problem. So those are the true fears so we should keep it at that kind of philosophy.

So please give any opinions or, the experts, this is good chance to share the experience

and ideas and those kinds of things, to… as I said, we have many different kinds of

research then we are focusing on the possibilities to realize participatory research

that means maybe a link, the research to the real society to solve the problem. So

already we have two keynote speakers’ presentation in the mornings and they gave

us basically the very theoretical or conceptual framework although in the case of

Professor Saleh Ali’s he also gave us a very concrete case of concepts and base on that,

he gave us conceptual framework.

What we should do, what we should think. And then after that we have 5 very

concrete research presentations, so of course you can have questions relate directly

at the research itself, don’t hesitate to start. But also as I said, we’d like to know at

least three dimensions, one is how we are going to identify the real social problem or

community problem, then which kind of research we should form base on that, then

after the research but what can do or what we should do. That is exactly the part

of the important message that we got yesterday from Professor Saleh Ali’s special

lectures at the graduate school of Economics. And so by talking about that we might

be able to clarify, which kind of factors or conditions, we have to be aware to develop

those kinds of research, so this is just the beginning of my statement, so all should

be on your hand raising or whatever you said. Are there any persons who really fi rst

want to contribute? Okay.

Discussion

－ 94－

Participant A: Thank you very much. We have got a conflict now in China, in my

country, there are so many conflicts, now my country is transiting from the lower

income countries to the developing countries. Now in my country there are many

problems arising, as many problem with us, can say that the confl ict between rural

communities and the local government, we always have these kinds of problems and

they are very popular in the rural areas.

Also the widest problem that happens is also because of the land, the land,

because the government wants to come to the land, then sell the land to build houses

and then also sell the land to companies. Recently, another problem is in urban areas

the price of a house is increasing. And many people they cannot survive or they cannot

buy a house. It is very diffi cult for a newcomer from rural to urban. When my father

was young, he graduated from a university. My father was, I meant my father’s father

means my grandfather he went to school for education and graduated within 10 years

working he can buy a house, but now, maybe if you want to buy a house in Shanghai,

you will have to work for your whole life. And these are big problems in my country, so

I think if we want to solve this problem or confl ict, I want to ask all Professors to give

some advice or discussion. Thank you very much.

Prof. Kawamura: First he throws the problem to us, so maybe some of you can

respond. Actually he identifi ed a gap between the problems people recognize and the

university’s activities too, right.

Prof. Saleh Ali, Hasanuddin University: Thank you very much. I’d like to

make some comments about the presentation that we had today. Our topic is about

participatory research, it’s a kind of method inquiry. According to me it belongs to

positivistic paradigm. What I saw that presentation from our college here, they are

still under the positivistic paradigm, they are still under the positivistic paradigm

which is more on the perspective of more on the philosophical reductionism,

reductionism philosophy. That reality or phenomena can be studied by breaking down

the reality into parts and each part can be studied small parts or the whole part.

Now it is criticized by positivistic paradigm. As I mentioned in my presentation that

participatory research is a post-positivistic paradigm which is more concerned with

a holistic approach, it is different from the positivistic one. So in discussing this topic

today let’s focus on how we are using research to solve the problem holistically.

Say for example our fellow from China throws up a problem “How do we improve

the income of the rural people?” So like for example after research, you know, we fi nd

some evidence that cocoa, or cacao products can improve the well-being of the rural

－ 95－

Discussion

people. But, how can this kind of research directly improve their rural income? Did

they just hypothesize this, but there is no actual action that we can do to improve

the rural income. That’s the most important thing in participatory research. Action-

oriented, education-oriented and partnership-oriented, I mentioned this in my

presentation. Thank you.

Prof. Kawamura: Although I didn’t talk this possibility individually to Professor

Tanaka’s, but as I mentioned he has a very rich, extensive experience of research, fi eld

research especially in Sulawasi areas so maybe he can give us more good experiences

that he has had and his ideas too probably.

Prof. Koji Tanaka, Center for Southeast Asian studies, Kyoto University: As

soon as we are going to talk about participatory research, the concept or actual, how

can I say, the activities related to participatory research I think we have to define

what is participation. Then as Professor Saleh Ali told, research should be more quote-

unquote ‘action-oriented’. So I have listened to many reports from the session before

this and you have analyzed what are the problems, but in order to solve the problems

we need some more active approach to communities as well as to local governments,

as well as the third parties. Because every confl ict, every problem has many parties,

it’s the stakeholders, so not only the local communities. There are some outsiders who

are interested in confl ict itself, so we have to analyze many stakeholders.

So let me take an example from research conducted in Lampun province in

Sumatra in Indonesia. I studied about the farmers’ communities who exploited forest

areas in order to open agricultural land for their lives. And then that forest area was

enclosed by the government, central government, the central ministry of forestry, and

then nobody is allowed to settle in the forest area, nobody is allowed to cultivate the

land because this is the forest area, and even though there is the legal structures

but the local people, local government did not have enough control or management

powers because of the shortage of government offi cials and then in the former days it

was the forest land was almost all open access and then farmers get in to there and

settle their lives in the forest areas, then after that because of the environmental

issues, because of the global environmental issues, the government was forced to

strengthen the policies in relation to forest management, so they have to kick out the

farmers who settled there for a long time, so that conflict occurs. So I studied that

case and then I had many discussions with the local communities of course and also

discussions with the forestry persons, forestry offi cials. And then probably the role of

the researchers will be a kind of bridge, or as kind of mediators who play their role in

－ 96－

order to encourage the discussions or encourage the interaction between the parties.

Of course, this interaction or intervention should be based on the research fi ndings,

but not only the research findings analyses but also we have to propose some sort

negotiation among these quotas, so I think as I stated at the beginning, as far as you

are going to study with the method of participatory research, I think these kinds of

approach, these kinds of action-oriented approach are very innovative. Thank you.

Prof. Kawamura: I saw your eyes; I thought you had something to say... Okay good.

Now I’ve got the message, a clear message already. All the participatory research

that’s according to its following the terminologies of Professor Saleh Ali’s holistic

paradigms, then he also indicate with that way is the participatory research is not

always carried out as research itself, rather than the impact, and how we are going to

deal with it after the research is kind of an important factor. That should be within

the concept of participatory research. When we are doing the research we’re talking

about the causality, but we never talk about what we should do after the research but

he pointed out that’s the point we have to do. And also Professor Tanaka mentioned a

very similar thing too.

So then that means often in today’s presentations we saw after the research

analysis there are many recommendations. But that is going to be enough in the case

of conventional research but when we are talking about the participatory research by

which we are going to solve the problems of the real societies then we need a kind of

action-oriented method after the research, that’s the new thing we’ve got here. That

means those researches will be integrated into implementations of how to solve those

problems. So this is something very strongly related to the attitude anyways, that’s

also one of the messages that came from Professor Nakamura, so that’s one thing we

are starting to recognize the free markets or the kind of tele-visual age we are talking

about by using the participatory research.

So probably, also like Leidi said, the process of the research is something that we

haven’t discussed yet, but the process is also a very important part. That because it

directly links to the process of implementation after we do the research too, so maybe

we need to do some kind of clarifi cation of how we are going to do the research itself,

as a process, then also if you go back to the beginning stages, then Professor Tanaka

mentioned about the stakeholders, because when we see the problems we are going

to identify, could they also be giving us very different meanings and definitions, so

the stakeholders analysis and who is going to identify the problems and how they

are going to identify these, are probably also very important processes in the case

of participatory research. All those we didn’t discuss deeply about yet. So now what

－ 97－

Discussion

we knew is we have a necessity to identify the beginning stages of identifying the

problem, and then identify the stakeholders and then how we are going to identify

the problem, and then also carry out the research in which we are making also the

causality clarifi cations. But in this case the process could be also very important, that

could be not only for the job but the research itself, maybe we need to do something

but I don’t know but that is the second stage we may have to discuss.

Then the later ones, the third one is already the Professor Saleh Ali and Professor

Tanaka summations. How we are going to use, those and the output of the research.

That should be whenever we say oriented or action-oriented research means what you

are going to do after the research is a very important issue over this theme. So now

we have 3 dimensions, we have to clarify those ones, decide which kind of research

itself we should do although we said causality but many of the papers here are also

trying to identify the linkages between externalities or environment, and internality

or structures, you know to better clarify what the causal problem is too. So actually

we have those four dimensions that are what at this moment I just organized and

differentiated with what we have discussed.

Arsyad Muhammad: Thank you very much, especially Professor Tanaka. I

totally agree how to make those linkages between local governments and then to

communicate those research results. And also Professor Saleh Ali there are some

answers now as a result encouraging cocoa production can be expected to reduce

poverty, but how can I do and in which kind of way should I do this is very important

task. The problem is even I know Professor Saleh Ali has a very strong linkage

between his students and the local government, but bringing those research results

to the local government to be applied is no easy task. The reason is the parliament

or the political will of the parliament members is not easy to absorb that way, the

reason is the parliament or the political or parliament members do not easily shift to

take on board the research result or proposed solutions. So we need a strong approach

to make sure those parliament members start to solve this really important issue.

Because we have this experience and bring it to those local governments, but it is

essential to apply this research, totally we have to get the recommendation from the

parliament, which is a very political part, political will, so if we are not able to make

the recommendation then it is very diffi cult to apply this recommendation, so that’s

why this happen sometimes.

So in this case we need some kind of independent institution to encourage us

and then encourage local government because as Professor Saleh Ali, Professor

Tanaka today gave us a very good example without having any kind of confl ict from

－ 98－

the society to push those parliament members to receive this kind of result, it is very

diffi cult to get or achieve, again we can very much understand, so I’m saying actually

those policies, they have political weight. So we cannot apply very easy that way.

So to me let me keep as a result, after this comment of course, Professor Saleh

Ali here, I know in the case of local government it a little bit easier to talk because

we have closer linkage between the local government and the universities, but in the

case of national governments it is very diffi cult to communicate with them. Because

that totally… we have to go the parliament fi rst, then they have to have a meeting

and to decide if we can do it this way, however budget is also very very necessary, so

not only political will but also budget. The total problem we are facing at the time,

because even though we have the budget, but sometimes also local communities,

local people… yeah that’s true we did this for the local people but not all local society

or local people will accept it before seeing the improvement. Because… I’ll give you

one example. My respondents, I asked them “do you think that the poverty situation

is a problem?” They said, “no, the problem is our daily lives, not with the poverty

situation”. But in our eyes, the poverty situation is the problem, so this, to me, we

have to make a triangle, linkage between the local community, university and those

national governments, so I’ll keep at this with it as a result and we will probably be

able to achieve something. Thank you very much.

Prof. Kawamura: Actually he also mentioned about the social, we say social distance

or the gap between the researchers and the university’s positions and other bodies

and not only the local governments but also the local community people’s positions.

Well I think I’m expecting opinions or ideas from each of you, just like yesterday, and

then you can contribute to this seminar. Okay.

Participant C: Thank you very much for presenting all the presenters. I am grateful

for this academic stream. I also make the recommendation to most of them…look at

local action plans. So it’s very diffi cult, so there’s a big gap between the implementable

things and recommendations. So I think that because last year I learned that there

is PCM, in Japan there is Participatory Community Metrics or something, but it is a

logical framework analysis and so if we give the framework a recommendation using

the logical framework as a tool then it is made more practicable and understandable

for even a non-academic person. So I think that I should suggest if you use the logical

frameworks even we use for the project designing, so the same thing if you use it at

the last chapter, so it made more practicable and understandable I think, thank you.

－ 99－

Discussion

Prof. Tanaka: May I respond to Arsyad Muhammad?

Prof. Kawamura: Yes, please.

Prof. Tanaka: Listening to the comment raised by Arsyad Muhammad, I got some

impressions of these are very serious issues how researchers behave in front of

the rural communities you studied, so that is a very big issue. And then although I

emphasized the action-oriented research, I do not recommend you to change yourself

from a researcher to an activist! It should be the activities within the frame of

the research, so in that sense I’d like to take a phrase from Professor Nakamura’s

papers, so if you have them, please look at the front page, fi rst page, and then second

paragraph and Professor Nakamura mentioned that the more one specializes the

more one loses common sense. So this phrase is very important when we are getting

in touch with local communities. So in the case of Professor Arsyad you analyzed

the logical framework of the small scale cocoa farmers and then you analyzed. And

of course cocoa plantation is very closely related to the poverty elimination, and

then it’s okay, but of course the cocoa price is higher, they are richer. It’s very simple

knowledge, and people expect the high price of cocoa and if you analyzed cocoa is very

important to solve the poverty issues, so it is just this analysis is a very strict analysis

or very good analysis but the result, the cocoa is very closely related to the poverty,

it is very much common sense also. So it’s not necessary to do such analysis if the

farmer understands that the cocoa is very important, of course they are very much

interested in that price.

And then I would like to recommend to you, not only you but all of you, we have

to analyze the phenomena using the scientifi c ways, it’s okay, but we have to have a

wider scope when we apply the research. So that is very important. So if I take an

example from your areas, it is Sitrop in Indonesia, cocoa plantation is just the history

within the last 20 or 30 years. And then in the very beginning, it had a very high

price and then expanded, and probably there is a fl uctuation of prices. Then before

the cocoa boom there was a clove boom and sugar also, and the farmers also planted

cloves. Then before the cloves probably the farmers planted coconuts or some other

cash crops so the cocoa plantation is just a selection within such waves of economic

fluctuations of change in the cash-earning crops. So when you analyze the cocoa

farmers now, you have to pay attention to the history of the cash crop. Cash crops

in Indonesia played a very important role in the functioning of small scale farmers.

So not only the functional analysis but you also have to pay such attentions to the

historical perspective for example. With this knowledge you have to make yourself

－ 100－

closer to the farmers. So farmers keep their history, their memories. Your research

should be mixed with their memories. So as long as you ask the very quantitative

data following the questionnaires there is no harmonious interaction between

the people and you. So you have to know very detail about the history, about the

geographical or regional conditions. This is the base of the action-oriented research.

So that is my perception. So I didn’t simply recommend you to be an activist, so that

is a very important point.

Prof. Kawamura: Thank you very much for nice points. I really appreciate that. Yes…

Prof. Hisashi Nakamura, Ryukoku University: Thank you very much. I also am

going to support a statement made by Professor Saleh Ali and Professor Tanaka we

need not go to parliament or central government we need not a political agreement to

do anything. May I tell you a small anecdote, when I strongly recommended Professor

Yunus, Muhammad Yunus, for the Fukuoka Culture Prize in which I am a member

of the committee, some people said “No, this is an action-oriented study done by an

economist, but he doesn’t have any distinguished papers on economics”, some people

criticized. But fi nally it was given 5 million yen after three years he was awarded the

Nobel Prize a far bigger amount, but he came to Fukuoka and told us he didn’t go to

parliament or central government or he didn’t use any budget. He started in a small

village thinking how to organize poor people for the micro-finance problem that was

how his work started. It may not be very much academic yet had a certain impact on

the rural scene of Bangladesh. So we are told research workers are not having much

infl uence on political parties or governments or budgets, but we can all do something

small on the basis of what we found through our research. Thank you.

Prof. Kawamura: When I am listening the PR has had a research, probably, I cannot

say all, but most of you who are studying in this graduate schools of economics and

then working on how to reduce the poverty problem, without any qualifi cations you

can just you know feel very comfortable but the question I would like to raise is

when we are dealing with micro levels or… I often use “mezzo”. Mezzo is between

micro and macro. When we are dealing with the micro and mezzo levels, maybe the

particular research should be the very necessary procedures, and the concept of those

as Professor Saleh Ali pointed out as a change of the paradigm, but this is also the

truth in the case of macro and then global levels. I know we are dealing with these

ones. Somebody said well in the case of central government we don’t have that kind of

necessity, those kinds. The question is I have no idea what are the answers. Maybe I

－ 101－

Discussion

can ask the persons who are dealing with international relations and also migration,

the international migration, those ones, maybe you have some kind of opinions or

reactions, maybe by fi rst should I invite the…?

Participant D: Participatory research?

Prof. Kawamura: Yes, that’s the kind of validity of participatory research; maybe

you are dealing with international relations or the macro level approach. Just that’s

no…another way to use as a means.

Participant D: Is it true that participatory research is used in international

relations? Again it depends on the defi nition of international relations I think because

there is more of a…, at the macro level there are scholars of international relations

dealing with the theories of IR, international relations. So they are looking from the

abstract points of view so it might be diffi cult to use participatory research and they

are really doing what Professor Tanaka pointed out that Professor Nakamura wrote,

that the more you go deeper, the more you become abstract, you become further from

the real world in a way. So those scholars might not be that directly related to the

parts of the research. But when we look at international relations as interdisciplinary

study that some of the universities call it now, interdisciplinary areas or studies, then

you can use, we can use participatory research. If you ask me my personal experience

or opinion, as a student of IR, still I consider myself as a student of IR. I did Japan

and Oceania relations from international and political economic points of view, in the

case study I worked on I worked on free trade agreements and economic partnership

agreements, then I try to use both, I try to apply theories, I try to lead application or

implementation of economic partnership agreements between those countries from

the theories of international relations. Then in a way I try to link the theories and

paths to research by doing different, by trying to apply research methodologies but I

cannot say they are all IR issues.

Arsyad Muhammad: Personally, I say thank you very much to Professor Tanaka.

You can see quickly external point of my set which I don’t see honestly speaking. Well

it’s true that everybody knows that cocoa can be expected to reduce poverty meaning

that there is an assisting the relationship between smallholders and the poverty

situation, I totally agree. But I personally honestly speaking don’t know which are the

important parts which make this linkage to be done so this is primary reason why I

did this kind of thing, but however I totally agree if you can say this is the common

－ 102－

sense, that’s fairly true. But I really appreciate you can see external space of myself.

Then the second one is you say you should most close to the farmers. This is probably

one of the recommendations to graduate school of economics. Honestly speaking,

Professor I can leave university only 51 days. 51 days meaning a very limited time

to do this kind of work. I should say this then in this case I’m not saying because

of the limited time of my research but I have the limitation of resources to do the

research, so both sides are limitation to do the research but I have the limitations of

the research so because generally we can leave the university for a maximum ways

2 months. Because of this I cannot stay close to the partners but thank you Professor

this is input for the graduate school of economics. Thank you very much.

Musige Nishanta: Related to participatory research I think it is my opinion there

is some area we have to focus in our research to the local problem. There is in the

industrial sector and agricultural sector, we are using some models or techniques or

methods developed by distant countries such as Japan, but sometimes, most of the

time we fail some when we follow these models or techniques. I think our research,

as researchers we also have to do research in those areas, why those models or

techniques fail. Thank you.

Misa Shojiya, Research Assistant of Afrasian Centre for peace and Development

Studies, Ryukoku University: I major in international relations, as she said I am

in IR and public policies. I really enjoyed today’s presentations. I enjoyed today’s

presentation from the viewpoint of post-conflict peace building that is my research

topic. I think participatory research can give us some kind of answers to the questions

which we are asking among the international relations students, especially about

post-conflict peace building things. One thing which I was very impressed with

today is Professor Nakamura’s received local system because as you know now there

are a lot of critiques to our today approach of the international community that

the international community tried to impose the wisdom institutions, especially

democratization and also open market, so we have that kind of big question among

international relations students. So today I think the participatory research can give

us some kind of answer to our questions so it think we can study both viewpoints,

maybe we can enrich our study together.

Participant E: Okay, I want to emphasize or go back to the micro-level, Professor,

and use or emphasize a word that Professor Nakamura used which is organization.

I believe for participatory research, organization is essential. Not simply the

－ 103－

Discussion

organization of the people, but also the organization of different organizations

themselves or groups those are present in a local community. I believe that by

building or bridging the gap or aligning the focus or interaction between the different

groups present in a small community, I think we can achieve much more than if we

work alone. For example we are researches to a certain extent. We are working and

trying to fi nd and defi ne problems and also make recommendations or solutions as to

how we can alleviate a certain problem in a certain area. I believe like us there are

also other organizations or other people, stakeholders that are also interested in the

same common goal but the relationship or the interaction is not present and I believe

that some mechanism needs to be created. I can’t really tell how or what or when but

I do believe bringing together or bridging the gap between the communities, within

the community itself and other present organizations I think much more can be

achieved. And the accomplishments of our ultimate objectives will be met easier.

Temesgen Tilahun: Okay, thank you. I would like to make two points, fi rst one is

commitment about participatory research. I think the time, budget and other things

are not suffi cient conditions for researchers. In Ethiopia case, I got that commitment

is the most important factor for researchers. Most researchers would like not to go

to the remote areas to do research because they know that these remote areas have

not got any infrastructure fulfi llment, there is nowhere in the rural areas to eat or

sleep or something like that, so most researchers, serial researchers don’t want to go

there. There is no background information at all, I face such problems. In my research

area no such research has been done before. But when you go to the central areas, the

central parts of the country, there is a large number of duplicated research. So I think

if we really ought to bring about poverty reduction in our country it is important to

be committed enough to see and to observe the situations of the partner societies and

live together for certain time if possible. I got that this is the most important thing

from my experience.

The other thing is I think researchers should be independent of politics. I am

speaking from my country’s point of view. I know there are a larger number of serial

researchers who did the research in poverty reduction whether in larger general

systems or foreign security or whatever, but they are not politically independent,

then the research is suspended on the air, very difficult to implement because the

contemporary government or political party view them as if they are opposing

opposite the existing government. Of course it may be another question of how people

can live without politics, but sometimes I feel sorry when I read the research outcomes

written by those opposing researchers. Particularly if they were in the community or

－ 104－

living out of Ethiopia, they give you know large numbers valid and brilliant research

but this research are suspended on the air, nobody is going to implement it, as long

as there is a social gap, social distance between the contemporary government and

these researchers. So to my understanding, academicians should be free of politics to

a certain extent. So I think that this is one of the most important things for them to

have. Thank you.

Participant D: About your comment, Mr. Temesgen. About your comment I agree

and I disagree. First of all I think it’s very diffi cult to carry out independent research.

About history for example there is a common saying that ‘everything is written for

something, for some purpose’. So it is very difficult to be independent especially in

today’s quite interdependent society now today. And again at that point I might

disagree with you, but I agree with you that we as students or researchers, we don’t

have to be under the impact of politicians or politics but I believe that we should

do our research about politicians, we should go beyond politics, beyond politicians

and we should be able to have an effect with our research results, effect politics and

politicians. Especially, I would like to bring your attention to tomorrow, because

tomorrow is the beginning of the Copenhagen Climate Summit, so I might be a

little emotional because this summit is quite important for all of us so even as an

example when will look at the climate summit starting tomorrow, most of the key

players, key speakers are politicians, government leaders there. Of course there

are representatives from NGOs, a variety of universities, research institutions, but

still the decision makers will be unfortunately politicians. So that is something

important I believe that we should go beyond and have the power to affect politics

and politicians. Thank you.

Prof. Kawamura: Well, that’s a very important I would say, it relates to politics. But

in that case one of the things I understand the difference, is when you are dealing

with the real communities, and then how to develop this, it’s strongly related to the

distribution systems of resources and then fi nally talking about more abstract ways

at a global level like for say human rights or some kind of the international relations,

that’s not directly, I’m not talking long but short term, not directly to associated to the

distribution programs of resources.

Participant D: I agree. I understand your point.

Prof. Kawamura: Probably that’s the difference when we’re dealing with the

－ 105－

Discussion

research but then the social impact or needs of the research could be a little different

between your case and this case too. That is very important. You have to be aware of

that difference too.

Arsyad Muhammad: I have experience when I was working at a private university.

So the results we produce of that research. When we come to give that to local

governments, it’s very easy but it’s very diffi cult to apply a terrible budget because the

city might always say this decision has to come through the parliament so you have to

make sure of that with parliament fi rst, in order to get that budget for example. But

what we did at that time – because this dealing with political ways – what we did at

that time was going to a parliament member personally and asking him, not in front

of the meeting committee but personally we did it this way, and then he at that time

started to recognize, oh this is a really important issue, and then personally brought

that issue on that committee and then at that time they accent. But when we directly

brought that research from our side, from the university, directly to the parliament

everything was rejected. So I don’t know to conclude but this is the best bet. Thank

you very much.

Prof. Kawamura: I am afraid that time is running out, is there any person?

Prof. Saleh Ali: One thing that you and Professor Kawamura mentioned was it

was most important to discuss about the process of participatory research. And in

the process or participatory research one of the important things is how we define

the problem, who will defi ne the problem. The researcher or who? Professor Tanaka

mentioned that you have to consider the whole stakeholders also the lady from Belize

also said more about that. Okay, we agree that all stakeholders should be involved

in the decision in formulating a problem, but what is the role of the researchers in

the process? What is a kind of incidentally that should indentify or clarify in this

research, that’s one point.

And then the second point is how we collect information. Are we still using the

era of collecting the information by using the conventional method or what? Professor

Tanaka said that it’s like an activist way, I agree that participatory research is much

more developed by social activists, by social movements like that, like Paolo Freire

from Brazil that develop the idea of consciousness rising from the local people; they

have to perceive what the problem is. So I think that. As Arsyad mentioned, the

problem is the political situation also is very infl uential. Sometimes you have a big

problem and you already decide, you formulated it by involving all the stakeholders

－ 106－

but when you implement this process or apply the results you have the problem of

political rejection. Remember that Paolo Freire is a Brazilian and was rejected in

his country then went to the Venezuela or something like that, and then to Harvard

because the government rejected him, because of his approach, conservationist

approach. That’s the point.

And then the second point is about the unit of analysis. I think Professor

Kawamura and the ladies mentioned about the micro-level analysis and macro-

level analysis. Micro-level analysis is no problems. I do not see any problems with

implementing participatory research in the micro-level but in a macro-level I think

there is some problem then because that is related to my first question - who is

going to define the problems? The macro-level is very practical especially at the

international level. Who is going to defi ne? The UNDP or United Nations? Who? Are

the perceptions at the national level the same as the perceptions of the local people?

Maybe the international level they say that that the poverty is like this but when

you go and ask the people in the regions “are you poor?” They say: “No, we are not

poor”. This is a kind of problem of implementing the participatory research not only a

political aspect - who formulates the problem - but also in terms of unit of analysis of

the regions. Thank you.

Prof. Kawamura: Please let me continue by seniority because we have strong

personalities, so maybe I would like to… so we shouldn’t spend so much power on this.

Are there any additional statements from Professor Tanaka?

Prof. Tanaka: I think the discussion has developed very well so I don’t think it is

necessary.

Prof. Kawamura: He gave us a maybe a B+ or maybe an A-. I’m sure, I think.

Prof. Nakamura: Sorry there’s not much time. You know nowadays economists can

go beyond set areas for economics, for example the latest guiding of Amartya Sen can

be seen as almost of a philosopher. I can remember the last lecture delivered by a

British leading analytical philosopher, Whitehead, the last sentence of his last lecture

said exactness; exactness is a fake, ill-concentrated on the research of the positive.

He tried to analyze to see the logical meaning of statements in many ways but in

actuality when he retired, he came to write as a statement how exactness is a fake.

So we have to think about that kind of thing, we may not be very much accurate in

collection of the data or the research work, but if we are very much concentrating

－ 107－

Discussion

upon exactness then the whole picture may be missed as Doctor Whitehead warned.

Thank you.

Prof. Kawamura: Thank you. I think already we are over the original schedule so

I think I should conclude this one but very diffi cult to close this one. This is not the

conclusion but let me organize our discussion we did. So maybe I’d like to point out 6

points or issues or subjects.

One is we have the problem of how to identify the problems, that’s the beginning

stages. And then as Professor Tanaka mentioned we also should be aware of

stakeholders and then how and who is going to identify the problem. Of course we are

not able to invite all the stakeholders, but by identifying the process and also how and

what we are identifying the problem. By knowing that, we also understand the kinds

of limits that we are trying to carry out. That is one of the important things fi rst.

The second one is the research itself. One is like in the last statement from

Professor Saleh Ali, he mentioned how we are going to get the data collection, the

data, so how we can reach the data’s information. Always there’s also the political

infl uence functioning often, so which kind of data are really taking, so based on the

data we are starting to recognize the realities. So we now understand that this is the

problem we have to be aware of, anyway. Also within the research many discussions

are done focusing on the content or how to form the research content itself. In

Arsyad’s case he did a very good analysis but then even if that is a good analysis you

cannot reach the real communities that came from Professor Tanaka’s suggestion.

That means in order to give very good validities of that research or those analyses

maybe we need not only the variables but also we have to understand history and

also cultures. So means the totalities of that reality. Maybe this is easy to say. I know

that’s very difficult. Maybe for the researcher how to link the kind of functional or

structural approach and that total understanding of the society, that is also very

important issue. That is one thing that is able to give a base for participatory research

in the future.

The third one is the process of research. Although this one came from the lady she

suggested maybe the participatory method could be one of the ways to get participatory

research. That was easy to say but we don’t know how to do that, all those things that

Sara Hansan said are other methods or the logic, we have PCM. PCM is project cycle

management, but within that one we have those methods of this one. But that’s also I’m

not so sure if it’s practical or not but anyway, the process of the research itself is a very

important issue we have to consider. That was the third one.

Then the fourth one is after the research, you can have very good research

－ 108－

but how are you going to use it, what are you going to do? That we call one action-

oriented research, but then that means we are also carrying out the commitment for

the intercommunications. That’s also always the political problem we also associate

with that. But what we know is that all those in conventional ways did very good

research in this condition, but when we start talking about participatory research

then we should be aware of the impact or how you are going to do something after the

research. That could be a very important issue, and that’s the fourth point.

Then fi fth point is just Professor Tanaka’s suggestion or recommendation to our

researchers (Arsyad), don’t change your attitude in any ways, you cannot be ignoring

your other research here. That means there is probably a strong limit to get the

realities of participatory research by changing your attitude, no? Rather the more

important one is how to link between you and the other stakeholders, if I borrow

Professor Tanaka’s words. So that’s the way we are making network or the linkage,

with other researchers and then with other people. Could be a very crucial situation.

So that’s the fi fth point.

Then the sixth point is the unit of analysis. Well when we are dealing with just

like me or Professor Tanaka and Professor Saleh Ali and Professor Nakamura we

are the ones who are dealing with really grassroots, and then talking about the

people and community, then these are very comfortable words, when we are talking

about participatory research at the micro-level and micro-mezzo levels. But when

we’re talking about the macro-level or the globalized levels there’s actually a very

important differentiation. One of the participants pointed out, the point is we need

also to identify the validities of participatory research. We cannot apply maybe, we

cannot apply whole thing, and there is also a limit to the application of those ones.

Those six points could be the output we’ve got through today’s very intensive,

good discussion. I really appreciate your contributions. I really enjoyed especially

Professor Tanaka’s, Professor Saleh Ali’s and also Professor Nakamura’s and Shojiya-

san’s. Those people also contributing very well from outside I really appreciate those

ones. So let me fi nish my chairmanship, and then I will pass this on to my boss.

Prof. Pauline Kent, Head of Afrasian Centre for Peace and Development Studies,

Ryukoku University: I’m not quite sure which one is the boss! Let me begin by

repeating Professor Kawamura in saying thank you very much to our distinguished

guests, our keynote speakers and our presenters today. I think the discussion today

has been very provocative, extremely stimulating and it has reconfi rmed my beliefs

in the way Afrasia has taken an approach to research. We have tried to be inclusive;

we have tried to take a holistic approach, because conflict, conflict resolution isn’t

－ 109－

Discussion

something that you can fi x tomorrow. It’s part of a process and the confl ict and the

resolution is all part of the one process, so I think we have heard about this sort

of thing through today’s discussions. To be able to take a holistic approach though,

we can’t do it on our own, you’ve heard about the limitations of research, so in that

sense we need to take an international approach, also an interdisciplinary approach.

And I think we have been extremely successful in that challenge today with all our

presenters. So in that sense as director of Afrasia I think we have had a wonderful

discussion today and we heard that to be a researcher you need commitment. I think

we have seen the commitment but I think also especially from our young researchers

we have seen some wonderful enthusiasm for research, and I think this is also

extremely important. I think we have sent you on the way for long careers because I

think you realize now that research is a long process, sometimes it includes politics.

Sometimes you may become the activist. Remember that you are also the researcher,

who has to identify the problem correctly and then work from there. I do wish you

all, especially the young researchers all the best for the future, I can see futures

here. Hopefully we will have the opportunity to meet again. And for today to all our

participants, presenters, thank you very much for your wonderful participation.

龍谷大学アフラシア平和開発研究センター　研究シリーズ 9


Afrasian Centre for Peace and Development Studies, Ryukoku University

Research Series 9


発行日／ 2010 年３月 19 日発　行／龍谷大学アフラシア平和開発研究センター　　　　 http://www.afrasia.ryukoku.ac.jp/

　　　　〒 520-2194 滋賀県大津市瀬田大江町横谷１－５　　TEL/FAX 077-544-7173印　刷／株式会社　田中プリント

PUBLISHED BY AFRASIAN CENTRE FOR PEACE AND DEVELOPMENT STUDIES,

RYUKOKU UNIVERSITY

　1-5 Yokotani, Seta Oe-cho, Otsu City, Shiga 520-2194　TEL / FAX + (81) -77-544-7173　http://www.afrasia.ryukoku.ac.jp/

PRINTED BY TANAKA PRINT CO., LTD.

ISBN 978 - 4 - 903625 - 96 - 6表紙デザイン：　山中大輔・内田晴子

Participatory Research for Poverty and Conflict ResolutionThe 6th International Seminar of Afrasian Centre for Peace and Development Studies December 6, 2009




研究シリーズ　

９　　　　　　

Is There A Japanese IR?　

Seeking an Academic Bridge through Japan's H

istory of International Relations

龍谷大学アフラシア平和開発研究センター

　ロゴは、ガーナ・アディンクラ模様の「双頭のワニ」。双頭のワニは、２つの口がたとえ争っても胃袋はひ

とつであり、つまり目的は同じなのだから、争わずに協力していこうという意味合いの平和のシンボルであ

り、アジアとアフリカという２つの地域を合わせて「アフラシア」という圏域（スフィア）を象徴的に示す

とともに、他方で同地域における非暴力による紛争解決と平和の実現を目指す本センターの強い願いを示し

ています。

The logo mark of Afrasian Centre is adopted from an Adinkra symbol of “Siamese crocodiles” in the

ancient kingdom of Asante that existed in what is now the Republic of Ghana, West Africa. It is a

popular symbol of peace and unity, as Siamese crocodiles share a stomach, or the same ultimate goal,

even if they tend to fight with each other.

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